Conditions for granting a license to establish an insurance company

A license to establish an insurance company is not only an important first step but also an opportunity for businesses to affirm their position in the market. Licensing conditions help ensure that insurers operate in compliance with legal regulations, protect consumer rights and enhance industry reputation. This article will inform you about the conditions and procedures for granting a license to establish an insurance company.

Forms of organization and operation of insurance companies

According to the provisions of Article 62, Law on Insurance Business 2022, there are two main organizational forms for insurance companies in Vietnam:

• Insurance Joint Stock Company
• Insurance Company Limited

Depending on business needs, customers can choose the appropriate type of insurance business.

Regulations on conditions for granting licenses to establish insurance companies

Conditions on Shareholders and capital contributing members

According to Article 64, Law on Insurance Business 2022 and guided by Article 11 of Decree 46/2023/ND-CP, conditions for shareholders and capital contributing members are as follows:

• Organizations and individuals have the right to establish and manage businesses in Vietnam according to the provisions of the Law on Enterprise.
• The organization has legal status and is operating legally; In case of contributing 10% or more of charter capital, the business must be profitable for the last 3 consecutive fiscal years up to the time of submitting the license application and meet the financial conditions.
• An insurance enterprise that has been granted a license to establish and operate in Vietnam, contributing capital to establish a new insurance enterprise, must have been profitable for the last 3 consecutive financial years up to the time of submitting the application for issuance of license and meet capital adequacy ratio as prescribed.

Capital conditions

Charter capital is contributed in Vietnam Dong and is not lower than the minimum level according to regulations. Specifically, the minimum capital level of insurance enterprises is specified in Article 35 of Decree 46/2023/ND-CP as follows:

1. Minimum charter capital of a life insurance enterprise:

• Life insurance business (except unit-linked insurance, pension insurance) and health insurance: 750 billion VND;
• Insurance business as prescribed in Point a of this Clause and unit-linked insurance or pension insurance: 1,000 billion VND;
• Insurance business as prescribed in point a of this clause, unit-linked insurance and pension insurance: 1,300 billion VND.

2. Minimum charter capital of non-life insurance enterprises:

• Non-life insurance business (except aviation insurance, satellite insurance) and health insurance: 400 billion VND;
• Insurance business as prescribed in Point a of this Clause and aviation insurance or satellite insurance: 450 billion VND;
• Insurance business according to the provisions of Point a of this Clause, aviation insurance and satellite insurance: 500 billion VND.

3. Minimum charter capital of a health insurance enterprise: 400 billion VND.

Shareholders and founding members are not allowed to use loan capital or investment trust capital from other organizations or individuals to contribute capital.

Personnel conditions

According to the provisions of Clause 3, Article 64 of the Law on Insurance Business 2022, the Chairman of the Board of Directors or Chairman of the Board of Members, Director or General Director, legal representative, and Actuary are expected to answer questions. Meet the conditions and standards of management capacity, experience and professional expertise. Specific conditions are specified in Article 81 of the Law on Real Estate Business 2022.

Conditions for organization and operation

Insurance businesses are organized in two forms of operation: joint stock company, limited liability company and have a draft charter in accordance with the provisions of the Law on Enterprise.

Some notes when applying for a license to establish an insurance company

When applying for a license to establish an insurance company, businesses need to note the following points:

• Must fully meet the conditions for applying for a license to establish an insurance company.
• Prepare complete and accurate documents according to regulations. The dossier includes the application, draft charter, 5-year business plan, key personnel records, and documents on capital contributions.
• Pay attention to submission deadlines and additional documents. The maximum time limit for additional documents is 6 months from the date of receiving notification from the Ministry of Finance.
• Understanding clearly the order, procedures, and competent authority to issue licenses to establish an insurance company will help make the implementation process easy and quick.
• Proactively contact management agencies for detailed instructions. The licensing process is often long and complicated, requiring close coordination.

Consulting services and support for licensing to establish an insurance company in Long Phan

Long Phan will support customers in applying for licenses successfully and on schedule. Below, we provide comprehensive consulting services during the process of applying for a license to establish an insurance company, including:

• Consulting on choosing the appropriate organizational form.
• Advise on requirements that need to be met to be granted a license.
• Support in preparing complete and accurate licensing applications.
• Draft documents such as company charter and internal governance regulations.
• Consulting on shareholder structure and charter capital to meet regulations.
• Detailed instructions on the order and procedures for applying for a license to establish an insurance company.
• Business representatives prepare documents and carry out procedures to apply for a license to establish an insurance company.
• Support in implementing post-licensing procedures.

Applying for a license to establish an insurance company is a complicated process, requiring careful preparation and strict compliance with legal regulations. Long Phan, with experience in consulting many insurance projects, is ready to support customers throughout this process. Please contact us immediately via hotline: 0906735386 for advice and guidance.