Application for the license for establishment and operation of a mutual microinsurance organization in Vietnam

Application for the license for establishment and operation of a mutual microinsurance organization in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What is mutual providing microinsurance product?

Mutual providing microinsurance product refers to an entity that has legal personality, independent accounting regime; is founded by members or institutional representatives of members to render not-for-profit microinsurance product in order for members participating in insurance to offer mutual aid or support to each other according to the mechanism of voluntary contribution, financial autonomy and self-responsibility before law if such aid or support is restricted to their assets generated from microinsurance product.

(According to Clause 23, Article 4 of the Law on Insurance Business 2022)

2. Application for the license for establishment and operation of a mutual microinsurance organization in Vietnam

Specifically, in Clause 2, Article 10 of Decree 21/2023/ND-CP, an application for the license for establishment and operation of a mutual microinsurance organization includes:

- The application form made using Form No. 01 in the Appendix enclosed with Decree 21/2023/ND-CP;

- The draft charter of the mutual microinsurance organization;

- A written certification, given by a licensed commercial bank operating in Vietnam, of establishment capital (which shall not be smaller than the one prescribed in Clause 1 Article 7 of Decree 21/2023/ND-CP) which has been sent to the escrow account opened at this bank and shall be released only after the Ministry of Finance of Vietnam has issued the license for establishment and operation or written notice of its refusal to issue the license;

- The plan for provision of microinsurance products which must indicate processes and network for providing microinsurance products; estimated revenues, expenses and incomes from the provision of microinsurance products in the first 03 years in conformity with the number of members and business network of the mutual microinsurance organization;

- The resolution of the conference on establishment of the mutual microinsurance organization which has adequate contents as prescribed in Clause 2 Article 9 of Decree 21/2023/ND-CP (if founding members are individuals);

- The written approval of establishment of the mutual microinsurance organization given by a competent authority defined in the charter of the institutional representative of members (if the founding member is the institutional representative of members);

- The list of founding members and documents proving their satisfaction of the conditions laid down in Point a Clause 1 Article 149 of the Law on Insurance Business 2022 (if founding members are individuals);

- The charter, copy of the establishment decision or business registration certificate or another document of equivalent validity of the institutional representative of members (if the founding member is the institutional representative of members);

- Curriculum Vitae (CVs), criminal records; copies of citizen identity cards or ID cards or passports or other valid personal identification papers; copies of diplomas, degrees, certificates and/or documents proving capacity and professional competency of candidates for the positions of Chairperson of the Management Board, General Director or Director, legal representative and actuary of microinsurance products of the mutual microinsurance organization;

- Explanations and commitment to build an information technology system meeting the requirements laid down in Clause 6 Article 149 of the Law on Insurance Business 2022.

3. Conditions for licensing the establishment and operation of mutual microinsurance organizations in Vietnam

A mutual microinsurance organization must meet the conditions laid down in Article 149 of the Law on Insurance Business 2022 of which Clauses 2, 3 and 5 are elaborated as follows:

(1) The amount of establishment capital in VND shall not be less than VND 10 billion. Sources of establishment capital of a mutual microinsurance organization:

- Capital contributed by individuals that are founding members. Founding members shall not be allowed to contribute borrowed funds or assets held in trust for other entities for capital contribution purposes;

- Financial support given by the institutional representative of members;

- Donations or grants of sponsors, international organizations, programs/projects;

- Other lawful sources of capital as prescribed by law.

(2) Any candidate for the position of Chairperson of the Management Board, General Director (or Director), legal representative or actuary of microinsurance products must meet the conditions and standards laid down in Article 24 and Article 25 of Decree 21/2023/ND-CP.

(3) The draft charter must be in line with business objectives of the mutual microinsurance organization and conform to the provisions of Article 8 of Decree 21/2023/ND-CP.

(Article 7 of Decree 21/2023/ND-CP)

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