After the 2022 Insurance Business Law ("IBL") (which was updated by ATA Legal Services here) was enacted, on 01/7/2023, the Government issued Decree No. 46/2023/ND-CP ("Decree 46") guiding certain provisions of the IBL, specifically regulating the organization and operation of insurance enterprises, reinsurance enterprises, foreign branches of insurance enterprise, and foreign branches of reinsurance enterprise in Vietnam (hereinafter referred to as the “Insurance Enterprises”).

Below, ATA will provide some noteworthy new provisions in Decree 46, specifically:

1. Increase the statutory capital level for Insurance Enterprises and insurance broker enterprises:
2. The minimum charter capital of Insurance Enterprises and insurance broker enterprises was adjusted as follows:

b. Supplementation of regulations on the minimum granted capital for foreign branches of reinsurance enterprises

c. A roadmap to supplement charter capital and self-financed capital for operating insurance enterprises

Here, Decree 46 also sets out a roadmap for insurance businesses and insurance branches as aforementioned to complete the addition of charter capital/self-funding capital under the new regulations as follows:

1. For insurance enterprises, reinsurance enterprises, foreign non-life insurance branches established, organized, and operating before the effective date of this Decree: completed before January 1, 2028;

2. For insurance broker enterprises licensed before January 1, 2023: completed before January 1, 2028;

3. For insurance broker enterprises licensed since January 1, 2023: immediately apply the new statutory capital level in this Decree.

2. Requiring Insurance Enterprises to register the method and basis for calculating insurance premiums before the application

Insurance Enterprises must register and obtain approval from the Ministry of Finance for the method and basis of calculating insurance premiums of insurance products belonging to the profession of life insurance, health insurance and motor vehicle insurance, except for compulsory insurance against civil liabilities of motor vehicle owners before application.

However, insurance products that have been approved by the Ministry of Finance before the effective date of this Decree shall not be subject to the re-registration if their method and basis for calculating insurance premiums are still satisfied as prescribed by the Ministry of Finance.

In addition, Insurance Enterprises, whose methods and grounds of insurance technical reserve establishment are not in accordance with this Decree, shall also be subject to re-registration with the Ministry of Finance within 06 months from the signature date of this Decree, applicable to the fiscal year from January 1, 2023. Particularly for the unit-linked reverse, the time limit for review and re-registration shall be 01 year from the effective date of this Decree.

3. Strict conditions for insurance agencies

a. For ordinary agencies:

• Must be an organization;
• Must have at least 3 employees directly performing insurance agency activities;
• Must have a process for monitoring compliance with the principles of insurance agency activities as per the IBL for employees during the organization and implementation of insurance agency activities.

b. For agencies such as credit institutions and branches of foreign banks:

• Must establish a specialized department to carry out insurance agency activities;
• The head of the department implementing insurance agency activities must have at least 03 years of working experience in the field of finance, banking, and insurance, and have insurance-related qualifications and certificates as prescribed;
• There must be at least 03 employees at each branch/ 01 employee at each transaction office of the credit institution to carry out insurance agency activities. These employees must be trained and have insurance agency certificates appropriate to the types of insurance that the credit institution provides as prescribed;
• Having an appropriate information technology system that meets the requirements;
• Having a process for supervising and controlling the quality of the performance of insurance agency activities of employees in the agency;
• Must set up a separate transaction counter (or separate dealing desk) to carry out insurance agency activities at each branch, or transaction offices of the credit institution and foreign bank branches.

c. Requirements for supplementation and maintenance of conditions for operating as an insurance agency:

1. In case the conditions have yet been fulfilled: Supplement and complete the within 01 year from the effective date of this Decree;
2. Conditions must be maintained throughout the entire operation term as an agency. In case of non-compliance, the Insurance Enterprise shall be required to issue a notice and terminate the agency contract if there is no remedy after 6 months from the date of notification.

Decree 46 takes effect from July 1, 2023, replacing Decree 73/2016/ND-CP.