To ensure the solvency of insurance enterprises, the law has provisions on legal capital. So what are the regulations on the legal capital of insurance enterprises? Lawyer X would like to advise as follows:
Legal grounds
– Law on insurance business;
– Decree 73/2016/ND-CP;
– Circular 50/2017/TT-BTC;
What is legal capital?
It can be understood that legal capital is the minimum capital required by law for an enterprise to meet to establish its business.
Thus, for the legal professions that stipulate the level of legal capital, the enterprise established with the charter capital is not allowed to be lower than the legal capital. Specific regulations on legal capital for each industry are specified in the Enterprise Law and related legal documents
Why is it necessary to stipulate legal capital for insurance enterprises?
The regulation of legal capital for enterprises in the insurance sector is not an infringement of the right to freedom of business. The purpose and meaning of the law when regulating legal capital is to protect the legitimate rights and interests of consumers, customers, and partners operating in that field.
Such regulation is a measure for insurance enterprises to prove their economic potential.
Regulations on the level of legal capital
For insurance businesses
Of non-life insurance enterprises:
– Non-life insurance business (except for the following cases); and health insurance: 300 billion VND;
– Besides, insurance business according to the above regulations; and aviation insurance or satellite insurance: VND 350 billion;
– Particularly, insurance business according to the above regulations, aviation insurance, and satellite insurance: VND 400 billion.
Of life insurance enterprises:
– Life insurance business (except unit-linked insurance, retirement insurance); and health insurance: VND 600 billion ;
– Insurance business according to the above regulations; and unit-linked insurance or pension insurance: VND 800 billion;
– Insurance business according to the above regulations, unit-linked insurance, and retirement insurance: VND 1,000 billion.
For foreign branches:
– Firstly, non-life insurance business (except for the cases below this clause); and health insurance: VND 200 billion;
– Particularly, insurance business according to the above regulations; and aviation insurance or satellite insurance: VND 250 billion;
– Besides, insurance business according to the above regulations, aviation insurance, and satellite insurance: VND 300 billion.
For insurance brokerage businesses:
– Original insurance brokerage business; or reinsurance broker: VND 4 billion;
– Moreover, original insurance brokerage and reinsurance brokerage business: VND 8 billion.
Related article:
Procedures for establishing a foreign insurance branch in Vietnam
Insurance regime of foreigners when participating in labor in Vietnam
Frequently asked questions
According to the law, the legal capital of a health insurance enterprise is VND 300 billion. Health insurance business enterprises are not allowed to register legal capital lower than this level.
According to the law, the legal capital of a non-life reinsurance business or both non-life reinsurance and health reinsurance: is VND 400 billion.
According to the law, the legal capital of a life reinsurance business or both life reinsurance and health reinsurance: is 700 billion VND.
According to the law, the legal capital of enterprises dealing in all 3 types of life reinsurance, non-life reinsurance, and health reinsurance: 1,100 billion VND.
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