Gide Clientalert Vietnam Insurance Dec2014
Gide Clientalert Vietnam Insurance Dec2014
Gide Clientalert Vietnam Insurance Dec2014
INSURANCE | VIETNAM |
22 DECEMBER 2014
Health insurance
17%
Property and
damage
insurance
56%
25%
2%
General liability
insurance
Other kinds of
insurance
INSURANCE | VIETNAM |
22 DECEMBER 2014
life insurance;
health insurance.
Insurance entities must operate only within the scope as prescribed in their licence, and as a
general rule, insurers are not permitted to conduct simultaneously life and non-life insurance
business, except where a life insurer conducts personal accident and health care insurance as
a supplement to life insurance.
Life Insurance
Life insurance products permitted include:
Traditional insurance: whole life insurance, pure endowment insurance, term life insurance,
endowment insurance and annuity insurance;
Pension insurance.
The MoF details terms and conditions which must be satisfied by insurers providing life
insurance products, and personal accident and health care insurance ancillary to insurance
products.
Non-life Insurance
Non-life insurance products include property and damage insurance, insurance for goods in
transportation, aviation insurance, motor vehicle insurance, fire and explosion insurance,
marine hull and ship owners civil liability insurance, public liability insurance, credit and
financial risks insurance, business loss insurance, agriculture insurance and guarantee
insurance.
The MoF also details compulsory forms of insurance in respect of which (i) the MoF
promulgates the applicable insurance terms and condition, premium scales and minimum sums
insured and (ii) a licensed insurer must not refuse to underwrite. This "compulsory" insurance
includes:
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INSURANCE | VIETNAM |
22 DECEMBER 2014
The MoF does not provide insurance terms and conditions, and premium scale for non-life
insurers of non-compulsory products whom are free to adopt their own and are not required to
obtain prior MoF approval for these. However, in circumstances in which non-life insurers fail to
ensure financial stability of itself or the rights of the policy holder, the MoF may request a nonlife insurer to cease underwriting products and request the insurer make specific amendments
to such policies and terms.
Health Insurance
Products categorised as health insurance include: personal accident insurance, medical
expenses insurance and health care insurance. Currently in Vietnam, these products are
provided either by non-life insurers or by life insurers as part of a life insurance package. There
has yet been any insurance company set up to provide solely health insurance products.
Similarly to life insurance, terms and conditions and premium scales of health care insurance
products must be ratified by the MoF.
Re-insurance
Foreign insurers are permitted to provide unrestricted cross-border reinsurance services. When
accepting to reinsure liability of a Vietnamese insurer, a foreign lead reinsurer and foreign
reinsurers of more than 10% of the total liability under the policy must have at least a BBB+
rating by S&P or Fitch, a B++ rating by A.M. Best, or a BAA1 rating by Moodys, or they
must have been granted equivalent ratings in the most recent fiscal year.
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INSURANCE | VIETNAM |
22 DECEMBER 2014
An individual shareholder can only hold up to 10% of the charter capital of the target
company;
An institutional shareholder can only hold a maximum of 20% of the charter capital of the
target company exceptions may apply e.g. acquisition of shareholding in a
distressed/restructured target insurance company or acquisition to become a strategic
shareholder); and
Cross-border supply
Foreign insurance enterprises may provide insurance to foreign-invested enterprises in
Vietnam (with more than 49% foreign-owned capital) and foreigners working in Vietnam.
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INSURANCE | VIETNAM |
22 DECEMBER 2014
Another example is the cross-border supply of insurance or insurance brokerage services. The
following additional conditions are applicable:
The foreign insurer/broker must be in a country with which Vietnam has already signed
international trade agreements regarding the supply of cross-border insurance into Vietnam
(e.g. a WTO member);
Other conditions regarding the minimal asset backing (USD 2 billion applicable to offshore
insurers or USD 100 million applicable to offshore brokers), credit rating (at least a BBB+
rating by S&P or Fitch, a B++ rating by A.M. Best, or a BAA1 rating by Moodys or
equivalent ratings), profitable operations in the last three years, security deposit of at least
VND100 billion (about USD50 million) with a Vietnam-incorporated bank, etc.
VND
USD equivalent
1. Non-life insurance
300 billion
15 million
and
health insurance
300 billion
15 million
and
aviation insurance
350 billion
17.5 million
and
satellite insurance
400 billion
20 million
2. Life insurance
600 billion
30 million
and
health insurance
600 billion
30 million
and
unit-linked insurance
800 billion
40 million
1 trillion
50 million
3. Health insurance
300 billion
15 million
4. Non-life re-insurance
400 billion
20 million
and
400 billion
20 million
5. Life re-insurance
700 billion
35 million
and
700 billion
35 million
and
pension insurance
health reinsurance
health insurance
With these levels of legal capital, an insurer/broker is allowed to open up to 20 branches and/or representative offices.
For each additional branch and/or representative office, VND10 billion (approximately USD 500,000) needs to be
supplemented to the charter capital of the insurer/broker.
USD-equivalent is converted based on exchange rate of USD1 = VND20,000 for ease of reference. Actual exchange
rate is different and may change from time to time.
This requirement is applicable to the owners equity capital of the local insurance company. This should be checked
against the company's financial statements.
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INSURANCE | VIETNAM |
6. Health re-insurance
22 DECEMBER 2014
400 billion
20 million
1,100 billion
55 million
200 billion
10 million
4 billion
200,000
and
8 billion
400,000
4 billion
200,000
7. All-types re-insurance
8. Non-life branch
re-insurance brokerage
Solvency margin
In addition to the legal capital requirement, insurers must also invest 2% of the applicable legal
capital as a security deposit into a commercial bank operating in Vietnam. The security deposit
may only be used to meet undertakings to policy-owners when it is insolvent and upon written
approval of the MoF. Insurers must also comply with other prudential requirements, such as:
premium reserves,
Money laundering
Anti-money laundering legislation exists under which insurance companies are obliged to
establish internal regulations on anti-money laundering; collect, verify and monitor information
about their clients; report to the State Bank of Vietnam and take particular measures (e.g.
postponement of transactions or freezing of accounts, sealing or seizing assets based on
decisions of state authorities) where transactions are suspicious, of a high value or carried out
by "risky" clients.
CONTACTS
SAMANTHA CAMPBELL
Partner
[email protected]
NASIR PKM ABDUL
Of Counsel
[email protected]
PHONG NGUYEN
Senior Associate
[email protected]
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