Conditions for conducting insurance agency business for foreign investors

1. Insurance business 

Insurance agency business is one of the insurance business activities under the Law on Insurance Business 2022. Accordingly, Insurance agent service refers to one or several fiduciary duties assigned by an insurer, a foreign non-life insurer’s branch or a mutual providing microinsurance product, including giving advice or counsels on insurance products (also insurance plans or schemes); introducing insurance products; marketing insurance products; making arrangements preparatory to the conclusion of insurance contracts; collecting insurance premiums; gathering related documents necessary for settlement of claims and payment of insurance. 

Thus, when considering concepts about insurance, some characteristics are drawn as follows: 

• Scope of operation: operates within the scope of authorization of the insurance business; 
• The subject is the authorizing party in the insurance agency contract: Either party to an insurance agency contract must have an insurance business function, including: 

1. • Insurers; 

1. • Branches of foreign non-life insurers; 

1. • Mutual organizations providing microinsurance; 

• Some of the work an insurance agent can do when running an insurance agency business: 

1. • Giving advice or counsels on insurance products; 

1. • Introducing insurance products; 

1. • Marketing insurance products; 

1. • Making arrangements preparatory to the conclusion of insurance contracts; 

1. • Collecting insurance premiums; 

1. • Gathering related documents necessary for settlement of claims and payment of insurance; 

2. Types of insurance 

Currently, there are 3 types of insurance, specified in Article 7.1 of the Law on Insurance Business 2022 with corresponding types of insurance operations specified in Articles 3, 4, and 5 of the Law on Insurance Business 2022, specifically: 

• Life insurance;  
• Health insurance;  
• Non-life insurance.

3. Market access conditions for foreign investors   

Insurance agents are committed industries, specifically the WTO Schedule of commitments on services, the VJEPA Investment Agreement, the VKFTA Investment Agreement and the Trans-Pacific Trade Agreement CPTPP no longer restrict investors’ market access to the insurance industry and insurance-related services, including insurance intermediaries (insurance brokers, insurance agents). Thus, foreign investors are not restricted from accessing the market for insurance agency services.    

4. Conditions for insurance agency business  

Insurance agent is a conditional business line according to the List of conditional business lines in Appendix IV of the Investment Law 2023. Operating an insurance agency without satisfying the statutory conditions is strictly prohibited. According to the Law on Insurance Business 2022, conditions for doing insurance agency business are divided into two groups: (i) Conditions for individual investors and (ii) Conditions for institutional investors.   

4.1 Conditions for individual investors 

Individuals operating as insurance agents must meet all conditions: 

• Firstly, be a Vietnamese citizen permanently residing in Vietnam; 
• Secondly, have full civil act capacity; 
• Thirdly, hold the certificate of practicing as an insurance agent; 

4.2 Conditions for institutional investors 

Insurance agency organizations must fully meet the conditions:

• Firstly, be licensed or permitted for their establishment and operation in Vietnam; 
• Secondly, obtain registration for their scope of insurance agent services under the regulatory provisions of the Corporate Law. As for any entity engaged in conditional business sectors and industries, a license, certificate and other approval or certification document (if any) containing information about permission for insurance agent services that is issued by a competent agency shall be needed. 
• Thirdly, be staffed by employees directly rendering insurance agent services that meet the following conditions:  

1. • Be a Vietnamese citizen permanently residing in Vietnam; 

1. • Have full civil act capacity; 

1. • Hold the certificate of practising as an insurance agent; 

• Fourthly, meet personnel and other conditions as prescribed by the Government, specifically: 

1. • There must be a minimum of 3 employees directly performing insurance agency activities; 

1. • There is a process for monitoring the compliance with the principles of insurance agency activities in accordance with the Law on Insurance Business for employees in the organization performing insurance agency activities. 

Notice:  

The insurance agency operation organization must maintain and comply with the conditions of operation of the insurance agency throughout its operation. In case one of the conditions is not met, such organization may not carry out insurance agency activities until it satisfies the prescribed conditions and must notify the insurance enterprise, branch of foreign non-life insurance enterprise, mutual organization providing microinsurance within 5 working days from the date of failure meet the conditions for insurance agency operation.  

After 6 months from the date of notification, but such organization still fails to meet the conditions for insurance agency operation as prescribed, the insurance enterprise, branches of foreign non-life insurance enterprises and mutual organizations providing microinsurance must terminate the insurance agency contract. 

 4.3 Principles of insurance agency operations  

• Persons cannot be insurance agents for other insurance companies or branches of foreign non-life insurance companies operating in the business lines or sectors that are the same as those in which the principal insurance companies or branches of foreign non-life insurance companies for which these persons are acting as agents are performing transactions. A person acting as an insurance agent for a mutual providing microinsurance products shall not be allowed to act as the insurance agent for the other mutual providing microinsurance products.  
• An entity cannot be an insurance agent for the other insurance company or branch of a foreign non-life insurance company or mutual providing microinsurance products without the written approval from the insurance company, branch of the foreign non-life insurance company or mutual providing microinsurance products for which that entity is acting as the agent.  
• Persons rendering insurance agent services or employees of entities doing insurance agent business can only render insurance agent services for insurance schemes or products in which they are trained. 
• Biodata about persons rendering insurance agent services and staff members of entities rendering insurance agent services that are directly involved in insurance agent services must be registered and updated in the database of insurance agent services. 
• Persons that have obtained certificates of practising in the insurance agent business sector, but have not operated in the insurance agent business sector, during 03 consecutive years must take tests to obtain new ones before commencement of the insurance agent services. 

In conclusion, Foreign investors (individuals and organizations) are entitled to access the Vietnamese market for insurance agency services without any restrictions, when entering the Vietnamese market. At the same time, foreign investors must fully meet the conditions to operate insurance agency services under the Law on Insurance Business 2022 and guiding documents under Vietnamese law before actually doing business. 

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