Licensing conditions of insurance brokerage companies in Vietnam

Licensing conditions of insurance brokerage companies in Vietnam (Internet image)

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

1. Licensing conditions of insurance brokerage companies in Vietnam

Licensing conditions of insurance brokerage companies in Vietnam according to Article 133 of the Law on Insurance Business 2022 are as follows:

- Licensing conditions of founding shareholders or members, including:

+ In order to obtain business licences or permits, entities and persons applying for these licenses or permits must have the rights of business incorporation and management in Vietnam under the Law on Enterprises 2020;

+ In order to obtain business licences or permits, entities applying for these licenses or permits need to have legal personality, are operating in Vietnam, and meet financial conditions in accordance with the Government’s regulations.

- Licensing conditions concerning capital or assets:

+ The amount of Vietnamese-dong contribution to the charter capital must not be less than the minimum required amount of charter capital under the Government’s regulations;

+ Shareholders and capital-contributing members shall not be allowed to contribute borrowed funds or funds or assets held in trust for other entities and persons for equity participation purposes.

- Licensing conditions concerning personnel: Any nominee for a Chairperson of the Managing Board or Chairperson of the Board of Members, Director or General Director or legal representative must meet managerial competency and professional qualification requirements and credentials prescribed in Article 138 of the Law on Insurance Business 2022.

- The applicant for such business licence and permit must choose their business type in accordance with this Law and must have the draft charter conforming to the regulations of the the Law on Enterprises 2020.

- In order to be licensed or permitted to contribute capital to establish; purchase shares or ownership interest making up at least 10% of charter capital of an insurance brokerage company, the entity incorporated under foreign law must satisfy the following conditions:

+ It must be an entity established under domestic law of a foreign country that is directly involved in or has their subsidiary render insurance brokerage services during 05 consecutive years promptly before the date of submission of application for the business license or permit;

+ It must be licensed or permitted to establish their insurance brokerage company in Vietnam, and must be certified not to commit any serious violation against law on insurance brokerage of the country where their head office is located, by the competent authority of the foreign country within 03 consecutive years immediately before the date of submission of application for the business license or permit.

2. Rights and obligations of insurance brokerage companies in Vietnam 

Rights and obligations of insurance brokerage companies in Vietnam according to Article 137 of the Law on Insurance Business 2022 are as follows:

- Insurance brokerage companies shall have the following rights:

+ Receive root insurance brokerage commissions, reinsurance brokerage commissions in accordance with the regulations of the Minister of Finance;

+ Gain proceeds from provision of insurance ancillary services;

+ Gain proceeds from other activities related to insurance contracts that are requested by policyholders;

+ Reserve other rights prescribed by law.

- Insurance brokerage companies shall take on the following rights:

+ Ensure privacy and security for information provided by clients, insurance companies, reinsurance companies and foreign branches in Vietnam, except as requested by the competent regulatory authority or agreed by clients, insurance companies, reinsurance companies and foreign branches in Vietnam;

+ Pay clients compensation for any loss or damage caused during the process of rendering insurance brokerage services;

+ Disclose pieces of information authorized by the Minister of Finance to clients;

+ Separately account for and track collections or payments authorized by insurance companies, reinsurance companies or foreign branches in Vietnam;

+ Purchase professional liability insurance plans tailored for insurance brokerage services;

+ Assume other obligations prescribed in law.

- Insurance brokerage companies shall be prohibited from performing the following acts:

+ Prevent policyholders or insured persons from providing information related to insurance contracts or incite policyholders or insured persons not to give details about insurance contracts;

+ Do promotion in the form of promises to provide illegal benefits to incite clients to enter into insurance contracts;

+ Incite policyholders to nullify insurance contracts remaining in effect to purchase new insurance contracts;

+ Recommend clients to buy insurance bound by less competitive requirements, terms and conditions at insurance companies or branches of foreign non-life insurance companies than those at others in order to earn higher insurance brokerage commission;

+ Provide clients with false information or information irrelevant to insurance requirements, terms and conditions imposed by insurance companies or branches of foreign non-life insurance companies.

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