Hello lawyer. I am currently looking to set up a business to do insurance business. What conditions do I need to meet to set up an insurance business? Rights and obligations of insurance enterprises? When falling into a difficult situation need to apply improvement measures? So, how are the insurance enterprises’ improvement measures regulated? I hope a lawyer can help me.
The insurance business is a conditional business. Business people who want to establish an insurance business need to meet strict conditions as prescribed by law. With the function of paying risks to the insured through signing an insurance contract, is it inevitable that the business may fall into a difficult situation? So how does that gas apply to the insurance business? What are the conditions for establishing an insurance business? To clarify this issue, Lawyer X would like to introduce the article “How are measures to improve insurance enterprises regulated?”. We invite you to read along.
Legal grounds
- Law on Insurance Business 2022
- Decree 73/2016/ND-CP
- Decree 151/2018/ND-CP
What is an insurance company?
According to Clause 17, Article 4 of the Law on Insurance Business 2022, the concept of insurance business is defined as follows:
“Insurance enterprise is an enterprise established, organized and operating in accordance with this Law and other relevant laws for insurance business, reinsurance business, and reinsurance transfer. Insurance enterprises include life insurance enterprises, non-life insurance enterprises, and health insurance enterprises.”
In there:
Insurance business is an activity of an insurance enterprise, a branch of a foreign non-life insurance enterprise, or a mutual organization providing microinsurance that accepts the risks of the insured, on the basis of a third party. purchase insurance to pay premiums for insurance enterprises, branches of foreign non-life insurance enterprises, mutual organizations providing microinsurance to indemnify and pay insurance premiums upon occurrence of insured events according to agreement in the insurance contract.
Reinsurance business means an activity of an insurance enterprise, reinsurance enterprise or foreign branch in Vietnam receiving a reinsurance premium from the insurer, reinsurer, or foreign branch. in other Vietnam, foreign insurance enterprises, foreign reinsurance enterprises, and foreign insurance organizations to commit to indemnify for liabilities received insurance.
Concession of reinsurance is an activity of an insurance enterprise, reinsurance enterprise or foreign branch in Vietnam that transfers part of the liability received reinsurance to the insurer or reinsurer. other foreign branches in Vietnam, foreign insurance enterprises, foreign reinsurance enterprises, foreign insurance organizations on the basis of payment of reinsurance ceding fees.
Accordingly, insurance enterprises need to meet the conditions for business establishment and insurance business. This enterprise provides insurance that accepts the risk of the insured, indemnifies, pays the insurance money upon the occurrence of the insured event as agreed in the insurance contract for which the insured has paid a premium.
Conditions for establishing an insurance enterprise
According to Articles 6 and 7 of Decree 73/2016/ND-CP, amended and supplemented by Decree 151/2018/ND-CP stipulating the conditions for establishing insurance enterprises. Whereby:
General conditions
For organizations and individuals contributing capital:
Organizations and individuals contributing capital to establish an insurance enterprise must satisfy the following conditions:
Organizations and individuals participating in capital contribution must contribute capital in cash and may not use borrowed capital or investment trust capital of other organizations and individuals to contribute capital;
An organization that contributes 10% or more of its charter capital must have had profitable business operations for 03 consecutive years preceding the year in which the application for a License is submitted;
Organizations participating in capital contribution operating in business lines requiring legal capital must ensure that their equity minus legal capital is at least equal to the expected capital contribution;
In case the organizations participating in capital contribution are insurance enterprises, insurance brokerage enterprises, commercial banks, financial companies or securities companies, these organizations must ensure to maintain and satisfy the following conditions: financial safety conditions and approved by the competent authority to contribute capital in accordance with specialized laws.
There are dossiers of application for licensing as prescribed.
For limited liability company
Conditions for establishing an insurance limited liability company:
In addition to the general conditions, a member contributing capital to establish an insurance limited liability company must be an organization and satisfy the following conditions:
For foreign organizations:
Being a foreign insurance enterprise licensed by a foreign competent authority to conduct business in the field it intends to conduct in Vietnam or a subsidiary specialized in performing the function of outward investment of the enterprise. a foreign insurance company authorized by a foreign insurance enterprise to contribute capital to establish an insurance enterprise in Vietnam;
– Having at least 7 years of experience in the field to be conducted in Vietnam;
– Have total assets of at least US$2 billion in the year immediately preceding the year in which the application for a License is submitted;
No serious violations of the law on insurance business activities of the country where the enterprise’s head office is located within 03 consecutive years preceding the year in which the application for a License is submitted.
For Vietnamese organizations:
– Having total assets of at least VND 2,000 billion in the year immediately preceding the year in which the application for a license is submitted.
For joint stock companies
In addition to the general conditions, an insurance business joint stock company needs to meet the following regulations:
There are at least 02 institutional shareholders that meet the conditions specified in Clause 1, Article 7 of Decree No. 73/2016/ND-CP and these two shareholders must jointly own at least 20% of the shares of the company. Insurance joint stock company is expected to be established.
Rights and obligations of insurance enterprises
According to Article 21 of the Law on Insurance Business in 2022, insurers have the following rights and obligations:
Rights of insurers
The insurer has the following rights:
a) Collect insurance premiums as agreed in the insurance contract;
b) Request the insurance buyer to provide fully and truthfully all information related to the conclusion and performance of the insurance contract;
c) Cancel the insurance contract specified in Clause 2, Article 22 or unilaterally terminate the performance of the insurance contract specified in Article 26 of this Law;
d) To refuse to indemnify or pay insurance premiums in cases not covered by insurance liability or in cases where insurance liability is excluded as agreed upon in the insurance contract;
dd) Request the insurance buyer to apply measures to prevent and limit losses in accordance with the provisions of this Law and other relevant laws;
e) Request a third party to reimburse the amount that the insurer or branch of the foreign non-life insurance enterprise has indemnified the insured for property damage; economic interests or obligations under the contract or obligations under the law; civil liability caused by a third person;
g) Other rights as prescribed by law.
Obligations of the insurance enterprise
Insurance enterprises have the following obligations:
a) Provide the insurance buyer with an insurance request, a questionnaire related to the insured risk, the insured object, the insurance rules, conditions and terms;
b) Explain clearly and fully to the insurance buyer about insurance benefits, terms of exclusion of insurance liability, rights and obligations of the insurance buyer when entering into an insurance contract;
c) Provide the insurance buyer with evidence of entering into an insurance contract specified in Article 18 of this Law;
d) Issue insurance premium receipts to the insurance buyer as agreed in the insurance contract and relevant laws;
dd) Indemnify and pay insurance premiums upon occurrence of the insured event;
e) Explain in writing the reasons for refusing to pay compensation or insurance payment;
g) Coordinating with the insurance buyer to settle the third party’s claim for compensation for the damage covered by the insurance liability upon the occurrence of the insured event;
h) Maintain insurance contract documents as prescribed by law;
i) Confidentiality of information provided by the insurance buyer or the insured, except at the request of a competent state agency or with the consent of the insurance buyer or the insured;
k) Other obligations as prescribed by law.
How are the insurance enterprises’ improvement measures regulated?
Improvement measures are ways and solutions to make the current situation change, somewhat better. Improvement measures are used with an insurer when it is in financial difficulty and it is necessary to take necessary measures to improve the situation of the business, gradually recover. return.
In Article 111 of the Law on Insurance Business 2022, measures to improve insurance enterprises are prescribed as follows:
Notice of application of improvement measures
In case improvement measures must be applied, the insurance enterprise shall actively select and organize the implementation of one or several improvement measures and notify in writing the Ministry of Finance of the current situation, causes, improvement measures are applied.
Measures for improvement
According to Clause 2, Article 111 of the Law on Insurance Business 2022, interventions for insurance enterprises include:
Increase charter capital, allocated capital;
Enhancing business performance including focusing on exploiting effective insurance products; review insurance premiums corresponding to insurance conditions and liabilities; restructuring the reinsurance program; reduce operating costs, management costs, selling expenses; limit payment of remuneration, salaries and bonuses to managers;
Portfolio restructuring includes increasing holdings of highly liquid assets; sale or transfer of assets is ineffective or has a high degree of risk;
Strengthen risk management; reorganize the management apparatus and personnel; restrict the purchase of fixed assets; restrict the setting up and use of funds;
Other measures in accordance with the provisions of law.
Prohibited activities when taking improvement measures
In the process of implementing improvement measures, the insurer is not allowed to carry out the following activities:
Transfer profits abroad, distribute profits, pay dividends;
Increase reinsurance.
Liability of insurance enterprises when applying improvement measures
Insurers subject to the application of improvement measures shall have the following responsibilities:
- Administer, control and administer business activities and ensure asset safety;
- To take responsibility for the accuracy of information, documents, records, organizational and operational issues and related issues;
- Report to the Ministry of Finance on implementation results and improvement levels on a monthly basis or at the request of the Ministry of Finance;
- Other responsibilities as prescribed by law.
Related articles
- Conditions for business suspension of joint-stock company in Vietnam
- Certificate of business suspension of business in Vietnam
- Conditions for business suspension of business in Vietnam
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Frequently asked questions
The following types of insurance are available:
Life insurance is a type of insurance in case the insured person lives or dies.
Non-life insurance is a type of insurance for property damage and other loss or civil liability to a third person.
Health insurance is a type of insurance for the insured person’s injury, accident, illness, disease or health care.
In case an insurance enterprise, reinsurance enterprise or foreign branch in Vietnam has a capital adequacy ratio at a level that requires early intervention measures or has applied improvement measures within 12 consecutive months, However, the capital adequacy ratio cannot be overcome, the Ministry of Finance issues a document to apply early intervention measures.
Within 60 days from the date the Ministry of Finance issues the document on application of early intervention measures, insurers, reinsurance enterprises and foreign branches in Vietnam are responsible for developing a plan to remedy the situation. capital adequacy ratio and organize the implementation, and at the same time report to the Ministry of Finance on the current situation, causes and plans to overcome the capital adequacy ratio. The Ministry of Finance shall issue a document requesting insurance enterprises, reinsurance enterprises and foreign branches in Vietnam to adjust the remedial plan if deemed necessary.
Conclusion: So the above is Measures to improve insurance enterprises as per Vietnamese law. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
