Business types of insurance companies and reinsurance companies in Vietnam

Business types of insurance companies and reinsurance companies in Vietnam (Internet image)

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

1. Business types of insurance companies and reinsurance companies in Vietnam

Business types of insurance companies and reinsurance companies in Vietnam according to Article 62 of the Law on Insurance Business 2022 include:

- Joint-stock company.

- Limited liability company.

2. Business sectors or activities of insurance companies, reinsurance companies foreign insurance branches in Vietnam

Business sectors or activities of insurance companies, reinsurance companies foreign insurance branches in Vietnam according to Article 63 of the Law on Insurance Business 2022 are as follows:

- Insurers and foreign non-life insurers' branches can be involved in the following range or area of business activities:

+ Insurance, reinsurance or reinsurance cession business;

+ Management of funds and investment of funds generated in the insurance industry;

+ Provision of insurance ancillary services;

+ Other activities directly related to the insurance industry.

- Reinsurance companies and foreign reinsurance branches can be involved in the following range or area of business activities:

+ Reinsurance, reinsurance cession sector;

+ Management of funds and investment of funds generated from rendering reinsurance services;

+ Other activities directly related to reinsurance services.

- Insurance companies and foreign non-life insurance branches can choose only one of the types of insurance specified in clause 1 of Article 7 of the Law on Insurance Business 2022 to start their business, except in the following cases:

+ Life insurance companies are involved in the health insurance sector;

+ Non-life insurance companies and foreign non-life insurance branches are involved in business of health insurance products, each of which has the maximum insurance term of 01 year, and casualty insurance products, each of which has the maximum insurance term of 01 year;

+ Health insurance companies are involved in business of casualty insurance products, each of which has the maximum insurance term of 01 year.

3. Eligibility conditions of members contributing capital to establish insurance limited liability companies and reinsurance limited liability companies (hereinafter referred to founding members)

According to Article 65 of the Law on Insurance Business 2022, the founding member of an insurance limited liability company or a reinsurance limited liability company must be an entity and meet general licensing conditions prescribed in Article 64 of the Law on Insurance Business 2022 and the following conditions:

- Regulatory conditions for eligibility as the capital-contributing entity established under foreign law:

+ It must be a foreign insurance company, reinsurance company or finance and insurance corporation;

+ It must obtain certification from a foreign competent regulatory authority that, as a foreign insurance company, reinsurance company or finance and insurance corporation, it has not committed any serious offence against domestic legislation on insurance business of the country where their head office is located during 03 consecutive years immediately before the time of submission of application packages for such license or permit;

+ The business sector in which it proposes to get involved in Vietnam must comprise business activities that the foreign insurance company, reinsurance company or finance and insurance corporation applying for the license or permit is directly performing, or their subsidiaries are performing, within the latest 07 consecutive years;

+ It must own the minimum total asset of USD 02 billion in the year immediately preceding the year of submission of application packages for such business license or permit;

+ It must be committed to offering financial, technological, corporate management, risk management, governance and operational support for the insurance company or reinsurance company to be incorporated in Vietnam; must ensure that the insurance company or reinsurance company-to-be complies with regulatory provisions concerning compliance with financial prudence and risk management requirements laid down herein;

+ The insurance company, reinsurance company, finance and insurance corporation satisfying the conditions specified in point b, c, d and dd of Clause 1 of Article 65 of the Law on Insurance Business 2022 can authorize their subsidiaries specialized in outward investment to set up an insurance company or reinsurance company in Vietnam. Subsidiaries specialized in outward investment must meet the conditions specified in point d of Clause 1 of Article 65 of the Law on Insurance Business 2022;

- In order to meet the licensing conditions, each economic organization established under Vietnam’s law must own their minimum total asset of VND 2,000 billion in the year immediately before the year of application for such business license or permit;

- Pursuant to the regulations laid down in point d of clause 1 and 2 of Article 65 of the Law on Insurance Business 2022, the Government shall impose detailed regulations on the minimum required total assets varying over periods of time.

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