Insurance is a familiar term that has become closely tied to modern life. Running an insurance business brings significant benefits to companies, but many enterprises struggle with licensing due to a lack of understanding of the relevant laws and procedures. In this article, NPLAW explains the legal framework, requirements, and steps to obtain insurance business licenses in Vietnam.

I. Penalties for operating an insurance business without a license

According to Point a, Clause 4, Article 7 of Decree 98/2013/NĐ-CP on administrative penalties in the insurance and lottery business sectors, dated August 28, 2013:

  • A fine ranging from 80,000,000 VND to 100,000,000 VND shall be imposed for any of the following violations: Operating an insurance business, reinsurance business, or insurance brokerage without a license of establishment and operation.

Accordingly, conducting insurance business without a license shall be subject to a fine ranging from 80,000,000 VND to 100,000,000 VND. In addition, a remedial measure as provided at Point c, Clause 5, Article 7 of the same decree shall also be applied, requiring the violator to return any illegal profits obtained from the administrative violation.

II. Conditions for obtaining an insurance business license

Under Article 64 of the Law on Insurance Business 2022, the general conditions to establish and operate an insurance enterprise include:

1. Shareholders and capital contributors

  • Organizations and individuals must have the legal right to establish and manage a business in Vietnam with the provisions of the law on Enterprises.
  • Contributing organizations must have legal status and be operating lawfully. If they contribute 10% or more of the charter capital, they must have been profitable for the last three consecutive fiscal years before applying and meet financial requirements set by the government.
  • An insurance enterprise that has been granted a license for establishment and operation in Vietnam and contributes capital to establish a new insurance enterprise must have been profitable for three consecutive fiscal years immediately preceding the time of submission of the application for the license and must meet the capital adequacy ratio requirements in accordance with the Law on Insurance Business 2022.

2. Capital requirements

  • The charter capital must be contributed in Vietnamese dong (VND) and not lower than the minimum threshold set by the government.
  • Shareholders or capital contributing members cannot use loans or entrusted investment capital from other organizations or individuals to contribute capital for the establishment.

3. Personnel requirements

  • The enterprise must appoint a Chairman of the Board of Directors or Members’ Council, General Director or Director, legal representative, and Appointed Actuary who are expected to meet the qualifications, managerial capacity, experience, and professional expertise as prescribed in Article 81 of the Law on Insurance Business 2022

4. Organizational structure and charter

  • The enterprise must adopt an organizational structure consistent with the Law on Insurance Business 2022 and a draft charter that complies with the Law on Enterprises 2020.

III. Procedures for obtaining insurance business licenses 

1. Required documents

According to Article 69 of the Law on Insurance Business 2022, the application dossier includes:

  • A written request for the establishment and operation license;
  • Draft charter of the insurance enterprise;
  • A five-year business plan, which clearly specifies the proposed insurance operations, risk management model, technical reserve allocation, investment methods, and solvency forecasts;
  • A curriculum vitae, a criminal record certificate, and copies of diplomas and certificates evidencing the qualifications, professional competence, and expertise of the individuals proposed to be appointed as the Chairman of the Board of Directors or Chairman of the Members’ Council, Director or General Director, legal representative, and appointed actuary.
  • Details of capital contribution amount and method of contribution, list of organizations and individuals who are founders or shareholders/members contributing 10% or more of the charter capital, and the supporting documents showing they meet the corresponding conditions applicable to each type of insurance enterprise as prescribed in Articles 64, 65, and 66 of the Law on Insurance Business 2022.
  • A list of the beneficial owners of the insurance enterprise, determined according to criteria set by the government.

2. Procedure and process

Pursuant to Article 15 of Decree 73/2016/NĐ-CP, the procedure and process for applying for an insurance business license consists of:

  • Step 1: Organizations and individuals submitting an application for a license
  • The applicant prepares a complete application dossier as specified in Section III, Item 1 of this article and submit it to the competent authority for granting the insurance business license, which is the Ministry of Finance, pursuant to Clause 2, Article 71 of the Law on Insurance Business 2022.
  • Step 2: The Ministry of Finance (Insurance Management and Supervision Department) shall review and appraise the application dossier and may issue a written request for the investor to supplement or amend the dossier (If any)
  • Within 21 working days of receiving the application, if the dossier is incomplete or invalid, the Ministry of Finance will issue a written request for amendments or supplements.
  • Step 3: File amendment and resubmission (If any)
  • The applicant has up to six months from the date of the notification to correct and resubmit the application.
  • Step 4: The Ministry of Finance shall review and appraise the application dossier and grant the license for establishment and operation to the enterprise
  • Within 60 days of receiving a complete and valid application dossier, the Ministry of Finance will either issue the license for establishment and operation or send a written refusal stating the reasons.

IV. Questions on insurance business licenses 

1. Which authority issues licenses for foreign insurance enterprises?

The competent authority for granting a license to establish a foreign insurance enterprise is the Ministry of Finance, pursuant to Clause 2, Article 71 of the Law on Insurance Business 2022, specifically:

  • The Ministry of Finance has the authority to grant, reissue, amend, supplement, or revoke licenses for establishment and operation, and to suspend partially or wholly the business activities of insurance enterprises, reinsurance enterprises, and foreign branches in Vietnam, pursuant to the provisions of this Law and other relevant laws.

2. How long does the licensing process take?

As per Clause 1, Article 70 of the Law on Insurance Business 2022, the Ministry of Finance must issue or deny the license within 60 days from the date of receipt of a complete and valid application dossier. A refusal must be explained in writing and clearly state the reasons.

3. Common challenges in obtaining the license

When applying for an insurance business license, the applicant may encounter some difficulties, such as:

  • Lack of understanding of legal requirements, leading to rejection of the dossier;
  • Difficulties in choosing the appropriate organizational structure as required by Article 62 of the 2022 Law according to which an insurance enterprise may be organized either as a joint-stock company or a limited liability company;
  • Lack of thorough knowledge of the law creates difficulties in drafting the enterprise’s charter in a manner that complies with the provisions of the Law on Enterprises 2020;
  • Submitting incomplete or incorrect documents, requiring multiple corrections and resubmissions;
  • Increased costs and delays due to repeated trips or correspondence with authorities if the application dossier is incomplete or invalid.

V. NPLAW’s legal services

With extensive experience in legal consulting, Ngọc Phú Law Company (NPLAW) offers professional, efficient, and cost-effective support for insurance licensing procedures. Our dedicated team of lawyers ensures clients receive practical solutions to safeguard their legal rights and interests.

For assistance with insurance business licensing or other legal matters, contact us: