THE GOVERNMENT
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No. 45/2007/ND-CP
Hanoi, March 27, 2007
 
DECREE
PROVIDING GUIDELINES FOR IMPLEMENTATION OF A NUMBER OF ARTICLES OF LAW ON INSURANCE BUSINESS
THE GOVERNMENT
Pursuant to the Law on Organization of the Government dated 25 December 2001; Pursuant to the Law on Insurance Business dated 9 December 2000;
On the proposal of the Minister of Finance;
DECREES:
Chapter I
GENERAL PROVISIONS
Article 1. Governing scope
1. This Decree provides detailed regulations for implementation of a number of articles of the Law on Insurance Business.
2. Insurance business activities, reinsurance business activities, insurance broking activities and insurance agency activities shall be within the governing scope of this Decree.
3. This Decree does not apply to social insurance, medical insurance, deposit insurance and other types of insurance not of a business nature which are operated by the State.
Article 2. Policies for development of the insurance market
1. [The State's policy is] to develop a safe and healthy insurance market right across the board in order to meet the insurance needs of the economy and of the citizens, and in order for all entities to benefit from international standard insurance products; to create a fair business environment which mobilizes the strength of all economic sectors, to raise the competitiveness of the insurance industry, and to meet the requirements for international economic integration.
2. The State shall facilitate insurers to research and develop insurance products and encourages all organizations and individuals to participate in insurance.
3. The State shall facilitate the Vietnam Insurance Association and other socio-professional institutions to increase their self-regulatory role in the insurance sector, ensuring healthy competition for the benefit of all organizations and individuals participating in insurance.
Article 3. Conditions and principles for participation in insurance
1. Any organization or individual wishing to conduct insurance business, reinsurance business or insurance broking business in Vietnam must be granted a licence for establishment and operation by the Ministry of Finance pursuant to the Law on Insurance Business.
2. Organizations and individuals having insurance requirements shall have the right to select an insurer and shall only be permitted to participate in insurance with an insurer licensed to operate in Vietnam. No-one shall be permitted to illegally interfere in the right of an insurance purchaser to select an insurer or insurance broker.
Article 4. Classes of insurance and insurance products
1. Life insurance shall comprise the types of insurance products stipulated in article 7 of the Law on Insurance Business and investment linked insurance.
2. The Ministry of Finance shall provide a detailed list of insurance products covered by article 7 of the Law on Insurance Business.
3. Insurers shall only be permitted to conduct business in the types of insurance products stipulated in their licence for establishment and operation, and must satisfy all of the conditions on financial capability and on qualifications and expertise of professional staff in accordance with guidelines of the Ministry of Finance.
Article 5. Compulsory insurance
1. An insurer conducting business in compulsory insurance products shall not be permitted to refuse to sell compulsory insurance.
2. Organizations and individuals in the category of those who must have compulsory insurance shall be obliged to participate in compulsory insurance.
Chapter II
INSURERS AND INSURANCE BROKERS
Section 1. ESTABLISHMENT AND OPERATION OF INSURERS AND INSURANCE BROKERS
Article 6. Conditions for grant of a licence for establishment and operation
1. Any Vietnamese or foreign organization or individual contributing capital to establish an insurance enterprise or an insurance broking enterprise must satisfy the following conditions:
(a) Not fall within the category of prohibited persons as stipulated in article 13.2 of the Law on Enterprises;
(b) The conditions stipulated in article 63 of the Law on Insurance Business.
2. A foreign insurance enterprise investing in the establishment of an insurance enterprise with one hundred (100) per cent foreign owned capital or a joint venture insurance enterprise between a foreign insurance enterprise and a Vietnamese enterprise must satisfy the following conditions:
(a) The foreign insurance enterprise has permission from the competent body of the foreign country to conduct insurance business in the sector in which it is proposed to conduct business in Vietnam;
(b) The foreign insurance enterprise has been legally operating for at least ten (10) years pursuant to regulations of the country where it has its head office, calculated up to the date of lodging the application file for grant of a licence;
(c) The foreign insurance enterprise had total assets of a minimum vale equivalent to two billion USD in the year prior to the year of lodging the application file for grant of a licence;
(d) The foreign insurance enterprise has not committed a serious breach of the law on insurance business or of other laws of the country where it has its head office for a period of three consecutive years up to the year of lodging the application file for grant of a licence.
3. A foreign insurance broking enterprise investing in the establishment of an insurance broking enterprise with one hundred (100) per cent foreign owned capital or a joint venture insurance broking enterprise between a foreign insurance broking enterprise and a Vietnamese enterprise must satisfy the following conditions:
(a) The foreign insurance broking enterprise has permission from the competent body of the foreign country to conduct insurance broking business in the sector in which it is proposed to conduct business in Vietnam;
(b) The foreign insurance broking enterprise has been legally operating for at least ten (10) years pursuant to regulations of the country where it has its head office, calculated up to the date of lodging the application file for grant of a licence;
(c) The foreign insurance broking enterprise has conducted business profitably for a period of three consecutive years up to the year of lodging the application file for grant of a licence;
(d) The foreign insurance broking enterprise has not committed a serious breach of the law on insurance broking business or of other laws of the country where it has its head office for a period of three consecutive years up to the year of lodging the application file for grant of a licence.
Article 7. Application file and procedures for grant of a licence for establishment and operation
1. An application file for grant of a licence for establishment and operation shall comply with the provisions in the Law on Enterprises and its implementing guidelines, with article 64 of the Law on Insurance Business, and shall comprise:
(a) Request for grant of a licence for establishment and operation on the standard form issued by the Ministry of Finance;
(b) Draft charter of the enterprise in compliance with the Law on Enterprises, the Law on Insurance Business and their implementing guidelines. The draft charter of the enterprise must be signed by the legal representative and by founding shareholders or their authorized representatives;
(c) List of founding shareholders and the following accompanying documents:
- For an individual: Copy identity card, passport or other legal personal identification; and police record on the stipulated standard form;
- For an organization: Copy establishment decision, business registration certificate or other equivalent document of the organization; power of attorney and identity card, passport or other legal personal identification of the authorized representative of the organization.
In the case of a founding shareholder being a foreign organization, the copy business registration certificate must have been certified by the registration body within three months prior to the date of lodging the application file for grant of a licence;
(d) Confirmation from a bank authorized to operate in Vietnam of the amount of the charter capital held in an escrow account at such bank;
(dd) Operational plan for the first five years, consistent with the sector for which application is made, stipulating: the method for establishing insurance reserves; a reinsurance program; investment of capital; business effectiveness; liquidity of the insurer; economic benefits arising from establishment of the enterprise; and enclosing insurance rules, internal control rules, and risk management rules.
The above provision on the method for establishing insurance reserves, a reinsurance program and liquidity of the enterprise shall not apply to insurance brokers;
(e) List, curriculum vitae and notarized documents proving the ability, qualifications and expertise of the managers and executives of the enterprise;
(g) List of contributors of ten (10) per cent or more of the charter capital of the proposed insurer or insurance broker, including the amount and method of each such contribution and financial and other relevant information about such contributors;
(h) Rules, clauses and conditions, scales of premiums and commissions regarding the insurance products in which it is proposed to conduct business. This provision shall not apply to insurance brokers.
2. An application file for grant of a licence for establishment and operation of a joint venture insurance enterprise or insurance broking enterprise shall comply with the provisions in article 109.1 of the Law on Insurance Business, and shall comprise:
(a) The documents stipulated in sub-clauses (a), (b), (d), (dd), (e) and (h) of clause 1 of this article;
(b) Charter and licence for establishment and operation of each party to the joint venture;
(c). Joint venture contract;
(d) List of total assets and annual financial reports certified by an independent auditing organization as to the financial status of each party to the joint venture, for the three most recent years;
(dd) Documents from the competent body of the country where the enterprise has its head office:
- Permission for the insurance enterprise or insurance broking enterprise to establish an insurance enterprise or an insurance broking enterprise in Vietnam. If the law of the country where such applicant has its head office does not require written consent, then there must be a document confirming this;
- Confirmation that the insurance enterprise or insurance broking enterprise is currently conducting insurance or insurance broking business in the sector in which it is proposed to conduct business in Vietnam;
- Confirmation that the financial status of the insurance enterprise or insurance broking enterprise is currently healthy and that it satisfies all of the regulatory requirements of the country where such applicant has its head office.
3. An application file for grant of a licence for establishment and operation of an insurance enterprise or insurance broking enterprise with one hundred (100) per cent foreign owned capital shall comply with the provisions in article 109.2 of the Law on Insurance Business, and shall comprise:
(a) The documents stipulated in sub-clauses (a), (b), (d), (dd), (e) and (h) of clause 1 of this article;
(b) Charter and licence for establishment and operation of the foreign insurer or insurance broker in the country where it has its head office;
(c) Power of attorney to the general director (director) in Vietnam;
(d) List of total assets and annual financial reports certified by an independent auditing organization as to the financial status of the foreign insurer or insurance broker, for the three most recent years;
(dd) Documents from the competent body of the country where the enterprise has its head office:
- Permission for the foreign insurer or insurance broker to establish an insurance enterprise or an insurance broking enterprise in Vietnam. If the law of the country where such applicant has its head office does not require written consent, then there must be a document confirming this;
- Confirmation that the insurer or insurance broker is currently conducting insurance or insurance broking business in the sector in which it is proposed to conduct business in Vietnam;
- Confirmation that the financial status of the insurer or insurance broker is currently healthy and that it satisfies all of the regulatory requirements of the country where such applicant has its head office.
4. An application file for grant of a licence for an insurance enterprise or insurance broking enterprise shall be made in three sets comprising one original set and two copy sets. An application file for grant of a licence for an insurance enterprise or insurance broking enterprise with foreign owned capital shall be made in three sets comprising one set in Vietnamese and two sets in a commonly used foreign language. Copies of documents in Vietnamese and translations into Vietnamese must be certified by a Vietnamese notary in accordance with the law on notarization. Investors shall be liable for the accuracy of their application files.
5. The time-limit for issuance of a licence for establishment and operation shall be as stipulated in article 65 of the Law on Insurance Business, and any such licence issued by the Ministry of Finance shall concurrently be the business registration certificate.
6. The Ministry of Finance shall provide regulations on the order and procedures for evaluation of application files for grant of a licence for establishment and operation to insurers and insurance brokers.
Article 8. Fees for issuance of licences
Insurers and insurance brokers which have been issued with a licence for establishment and operation must pay a fee for issuance of their licence in accordance with the law on fees and charges.
Article 9. Procedures after issuance of licences
1. Within a time-limit of thirty (30) days from the date of issuance of a licence for establishment and operation, an insurer or insurance broker must publish an announcement in five consecutive issues of a central daily newspaper and a daily newspaper in the locality where it has its head office, containing the following main items:
(a) Name and address of the main head office, branch offices and representative offices of the insurer or insurance broker;
(b) Contents, scope and duration of operation;
(c) Amount of charter capital and amount of paid-up charter capital;
(d) Full name of the legal representative of the enterprise;
(dd) Number and date of issuance of the licence for establishment and operation;
(e) Insurance products or broking services which the insurer or insurance broker is permitted to provide.
2. Within a time-limit of twelve (12) months from the date of issuance of a licence for establishment and operation, an insurer or insurance broker must complete the necessary procedures required by law in order to officially commence the insurance or insurance broking operation. If this time-limit expires and an insurer or insurance broker has not commenced operation, its licence shall be withdrawn.
3. If during the process of an insurance operation the Ministry of Finance grants approval to an insurer or insurance broker for amendment of any of the items set out in article 69.1 of the Law on Insurance Business, such insurer or insurance broker must publish an announcement in accordance with the provisions in clause 1 of this article.
Section 2. ORGANIZATION AND OPERATION OF INSURERS AND INSURANCE BROKERS
Article 10. Operational organization of insurers and insurance brokers
The operational organization of an insurer or insurance broker shall include:
1. Head office.
2. Branches, transaction centres, bureaus and dependent accounting member companies (referred to as branches) being subsidiaries of the insurer or insurance broker and with the function of implementing all or a part of the function of such enterprise, including acting as authorized representative.
3. Representative offices being dependent units of the insurer or insurance broker and with the function of acting as authorized representative of the interests of such enterprise and of protecting such interests.
4. Business locations and transaction offices (referred to as business locations) being locations for conducting specific business activities, and being subsidiaries of the branch of the insurer or insurance broker.
Article 11. Conditions for opening a branch or representative office
1. Any insurer or insurance broker wishing to open a branch or representative office must satisfy the following conditions:
(a) The paid-up charter capital complies with regulations of the Ministry of Finance;
(b) The organizational and personnel structure, and the system of internal control and checks operates effectively;
(c) The insurer or insurance broker has not committed a serious breach of the law for a period of three consecutive years up to the year of lodging the application file; and the insurer is not in breach of the regulations on solvency;
(d) The branch or representative office has rules on organization and operation;
(dd) The person operating the branch or representative office has experience of and expertise in conducting insurance business and does not fall within the category of prohibited persons as stipulated by law;
(e) The application file for permission to open the branch or representative office complies with clause 2 of this article.
2. An application file for permission to open a branch or representative office shall comprise:
(a) Request to open the branch or representative office signed by the authorized representative of the enterprise, with a brief summary of the necessity for the branch or representative office, its name and location, and the contents and scope of its operation;
(b) Operational plan of the branch or representative office for the initial three years specifying the client structure, proposed market, contents and scope of operation, insurance products which are proposed to be offered, organizational and personnel structure, and location and technical and material facilities of the branch or representative office;
(c) Valid documents proving the enterprise satisfies the conditions stipulated in clause 1 of this article.
3. Within thirty (30) days from the date of receipt of a complete and valid file, the Ministry of Finance shall be responsible to reply in writing with its approval or refusal to approve, with an explanation of its reasons in the case of refusal.
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