The insurance industry attracts the attention of many investors these days. Many entrepreneurs intend to invest in this kind of business due to its promising future. Besides, insurance brokerage enterprise belongs to the insurance industry and now appears a lot on the market. So, in this article, LSX legal firm will give you information regarding: “Regulations on insurance brokerage enterprises in Vietnam”
Legal grounds
- Law on Insurance Business 2010
- Decree 73/2016/ND-CP
- Decree 151/2018/ND-CP
What is an insurance broker?
Insurance brokers act as intermediaries between consumers and insurance companies, helping policyholders find the policy that best suits their needs. Insurance brokers represent consumers, not insurance companies, and therefore they cannot bind coverage on behalf of the insurance company. That is the role of insurance agents, who represent insurance companies and can complete the sale of insurance.
Insurance brokerage services
Contents of insurance brokerage activities include:
- Firstly, providing information on the insurance types, conditions, terms, premiums, and/or insurance enterprises to the insurance buyers;
- Secondly, advising the insurance buyers on the evaluation of risks, selection of insurance types, conditions, terms, premium rate index, and insurance enterprises;
- Thirdly, negotiating, arranging the conclusion of insurance contracts between insurance enterprises and insurance buyers;
- Fourthly, performing other jobs relating to the performance of insurance contracts at the request of the insurance buyers.
Conditions for issuance of a license to establish and operate an insurance brokerage company
General requirements for licensing of establishment and operation of insurance enterprises, foreign branches, and insurance broker enterprises under the law:
Organizations and individuals investing in the incorporation of an insurance enterprise or insurance broker enterprise must satisfy the following requirements:
- Firstly, incur no prohibitions as defined in Section 2, Article 18 of the Law on Enterprise 2020.
- Secondly, investors must actualize their capital contributions in cash, which must not be financed by a loan or investment trust from other entities.
- Thirdly, corporate investors contributing to 10% or more of the charter capital are required to have conducted a profitable business in 03 consecutive years immediately preceding the year that the application for licensing is submitted and to have not incurred cumulative losses prior to the application for licensing.
- Fourthly, corporate investors conducting business lines that require a legal capital must undertake that their owner’s equity less the minimum legal capital is at least equal to the planned amount of investment.
- Lastly, if a corporate investor is an insurance enterprise, insurance broker enterprise, commercial bank, financial enterprise, or securities enterprise, it must fulfill and maintain financial safety conditions and obtain permission from competent authorities to make the said investments as per specialized laws.
For insurance enterprises, foreign branches, and insurance broker enterprises being incorporated:
- Firstly, have the charter capital (for insurance enterprises and insurance broker enterprises) or allocated capital (for foreign branches) at least equal to the legal capital according to Article 10 of Decree 73/2016/ND-CP.
- Secondly, have incorporated the type of business and charter (for insurance enterprises and insurance broker enterprises) or the regulation of organization and operation (for foreign branches) in conformity to the relevant laws.
- Thirdly, have planned managerial and operational personnel in conformity to Decree 73/2016/ND-CP.
Requirements for establishment of insurance broker enterprises
Vietnamese organizations and individuals investing in the incorporation of an insurance broker enterprise must meet the requirements mentioned above.
Also, foreign organizations investing in the incorporation of an insurance broker enterprise must adhere to the condition mentioned above and meet the following requirements:
- Such organizations are foreign insurance broker enterprises that are permitted by foreign competent authorities to broker insurance in Vietnam;
- Have operated for at least 10 years in the sector of insurance brokerage;
- Have not seriously violated any laws on insurance brokerage and other legal regulations of the home country for 03 consecutive years immediately preceding the year that the application for licensing submitted.
Application for licensing of establishment and operation of insurance broker enterprises
- The filled-in form of application for licensing as prescribed by the Ministry of Finance.
- The draft charter of the enterprise as per Article 25 of the Enterprise Law.
- The operational scheme for first 05 years. Such scheme shall specify the capital investment and business efficiency of the incorporation of the insurance broker enterprise.
- Copies of citizen identity cards or ID cards or passports or other valid personal identification papers; judicial records, resume, copies of degrees and certificates of the Chairperson of the Enterprise or Chairperson of the Member’s Council or Chairperson of the Board of Directors, General Director, and chief accountant of the insurance broker enterprise.
- The list of founding shareholders (or members) or contributors of 10% or more of the charter capital.
- The written attestation by a bank licensed to operate in Vietnam of the charter capital of the enterprise deposited in a frozen account in such bank.
- The partnership agreement as per Article 19 of the Enterprise Law (if a domestic organization and a foreign organization jointly invest in the incorporation of the limited liability company with 2 or more members).
- Written records of founding members’ or shareholders’ meetings
- The written mandates by founding members or shareholders to an individual or organization to handle formalities for licensing.
- The written confirmation by competent authorities in the home country of the foreign insurance broker enterprise of:
- The permission for the foreign insurance broker enterprise to establish insurance broker enterprises in Vietnam.
- The foreign enterprise’s ongoing operations in insurance brokerage;
- No serious violation of the foreign organization of any laws on insurance brokerage and other legal regulations in its home country for 03 consecutive years immediately preceding the year that the application for licensing submitted.
- The written confirmation by investors of their fulfillment of requirements for licensing.
Legal service of LSX Legal Firm
LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:
- Legal advice related to new regulations;
- Representing in drafting and editing documents;
- We commit the papers to be valid, and legal for use in all cases;
- Represent to submit documents, receive results, and hand them over to customers.
With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.
Furthermore, using our service, you do not need to do the paperwork yourself; We guarantee to help you prepare documents effectively and legally.
Also, you will not have to waste time preparing the application, submitting application, or receiving results. At those stages, we will help you do it smoothly.
After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.
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Related questions
The insurance brokerage enterprises shall enjoy insurance brokerage commissions. The insurance brokerage commissions shall be calculated into the insurance premiums.
The insurance brokerage enterprises shall have to buy professional liability insurance for their insurance brokerage activities at insurance enterprises operating in Vietnam.
The insurance brokerage enterprises shall have the obligations:
a) To conduct brokerage in an honest manner;
b) Not to disclose, supply information, causing damage to the legitimate rights and interests of the insured;
c) To pay compensations to the insurance buyers for the damage caused by their brokerage activities.
Contact LSX
Finally, hope this article is useful for you to answer the question about “Regulations on insurance brokerage enterprises in Vietnam”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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