In today’s era of globalization, Vietnam is becoming an attractive destination for foreign investors. The outstanding development of the economy and policy reform have created a favorable environment for investors from all over the world to flock to our country. In this context, the insurance industry is not an exception. Insurance, an important field in protecting assets and ensuring financial security, plays an important role in attracting foreign investor. However, in order to operate an insurance business for foreign investor in Vietnam, it is necessary to comply with some conditions and regulations of the law.

In this article, we will research about the conditions for operating insurance business for foreign investor in Vietnam. We will review the provisions of the Vietnamese Insurance Law and other guidance documents to gain a better understanding of the necessary process and requirements.

1. Market access conditions

According to the noted information above, foreign investor is currently not restricted in market access conditions, so he/she is allowed to establish 100% foreign-owned enterprise insurance service businesses in Vietnam. However, the insurance field is conditional business line, thus in addition to meeting the market access conditions, foreign investor also shall meet specific conditions prescribed by Vietnamese law, which are recognized in section 2 below.

2. Conditions on the form of enterprise allowed to insurance services business

According to the regulations of Vietnamese law, the current organizational forms for insurance enterprise and reinsurance enterprise are Joint Stock Company and Limited Liability Company. With the Joint Stock Company model, the enterprise to be established shall have the participation of at least 03 shareholders. With the Limited Liability Company model, the investor have the right to choose single member Limited Liability Company or Limited Liability Company with two or more members.

The structure and management of the enterprise may vary depending on the type of enterprise and the legal status of the investor (individual or organization).

3. Scope of operations for insurance enterprise, reinsurance enterprise, and foreign branch in Vietnam

Insurance enterprises, branches of foreign non-life insurance enterprises will be entitled to perform the following activities:

• Insurance business, reinsurance business, and reinsurance retrocession.
• Managing funds and investing capital from insurance business operations.
• Providing ancillary insurance services.
• Other activities directly related to insurance business operations.

Reinsurance enterprises and foreign reinsurance branches are allowed to conduct the following business activities:

• Doing reinsurance business and reinsurance retrocession.
• Managing funds and investing capital from reinsurance business operations.
• Other activities directly related to reinsurance business operations.

Insurance enterprises and branches of foreign non-life insurance enterprises are only allowed to one type of insurance business: life insurance, health insurance, non-life insurance, except for the following cases:

• Life insurance enterprises in the health insurance business.
• Non-life insurance enterprise and branch of foreign non-life insurance enterprise in the health insurance products business with a duration of 01 year or less and life insurance products with a duration of one year or less that cover the risk of death.
• Health insurance enterprise in life insurance products business with a duration of 01 year or less that cover the risk of death.

The outstanding development of the economy, along with supportive policies and legal reforms, which has created a favorable environment for foreign insurance companies to establish and operate in Vietnam. Compliance with the conditions and regulations of the law is an important factor to ensure the safe, transparent, and sustainable operation of foreign investor in the insurance business. Requirements such as registration, licensing, charter capital, rights and obligations are clearly defined to ensure sustainable development and maximum protection for both investor and policyholder. To research more about other specific conditions that insurance enterprise shall comply with, please refer to the article “Conditions for operating insurance business for foreign investor in Vietnam – Part 2.”

Time of writing: 15/05/2023

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer at info@cdlaf.vn

You can refer for more information:

• Establishment of Enterprise in Vietnam, What Foreign Investors Need to Consider (Part 1)
• Establishment of Enterprise in Vietnam, What Foreign Investors Need to Consider (Part 2)
• Procedure for Foreign Investor to contribute capital, purchase shares in the enterprise in Vietnam.
• The enterprise with opening and using direct investment capital account
• Avoiding the risks when leasing the office in Vietnam – some recommendations
• Foreign Investors provide Employment Services in Vietnam
• Franchise in Vietnam (Part 1)
• Franchise in Vietnam (Part 2)
• Foreign investor doing hotel business in Vietnam