On June 14, 2019, the National Assembly of Vietnam passed Law No. 42/2019/QH14 amending the Law on Insurance Business and the Law on Intellectual Property, which will come into effect on November 1, 2019, except for certain provisions amending the Law on Intellectual Property.
Although “services auxiliary to insurance” were committed to in the Schedule of Specific Commitments in Services of Vietnam to the World Trade Organization on January 11, 2007, and exist in practice, they are now, for the first time, regulated in Vietnamese domestic law. Some key regulations on the provision of services auxiliary to insurance are presented below.
Definitions of Services Auxiliary to Insurance
According to the amended Law on Insurance Business, services auxiliary to insurance are defined as a part of insurance business activities conducted by insurance enterprises, insurance brokerage enterprises, and other organizations and individuals for profit, and include the following:
Requirements for Provision of Services Auxiliary to Insurance
The amended Law on Insurance Business sets out requirements for individuals and organizations who wish to provide services auxiliary to insurance as follows.
With respect to an individual providing insurance consultancy services:
(i) Be 18 years or older with full civil act capacity.
(ii) Have a university or higher-level degree in the specialized insurance sector; if the individual does not have such degree, then he or she must have a university or higher-level degree in another specialty and also a certificate on insurance consultancy issued by a training institute lawfully established and operating either in Vietnam or abroad.
With respect to an organization providing services auxiliary to insurance:
(i) Have legal entity status and be duly incorporated and operating.
(ii) Ensure that any individuals directly providing the services auxiliary to insurance within the organization are 18 years or older with full civil act capacity. Each individual must also have a diploma or certificate appropriate for each type of services auxiliary to insurance provided, and the certificate must be issued by a training institute lawfully established and operating either in Vietnam or abroad.
Individuals directly engaged in insurance loss assessment activities must also satisfy the criteria for assessors stipulated in the commercial law, which requires an appropriate university/college degree, professional certificate, and three years of experience in assessment of goods or services.
Individuals directly providing actuarial services must also satisfy the criteria on compliance with law, ethics, qualifications, insurance actuarial practicing experience and membership in the International Actuarial Association.
It is worth noting that the amended Law on Insurance Business only provides some general requirements as explained above. The detailed requirements will be further regulated by subsequent subordinate legislation (such as a government decree or ministry circular).
Furthermore, other than the above requirements, providers of services auxiliary to insurance also have responsibilities, among others, to maintain the confidentiality of customer information and purchase professional indemnity insurance appropriate for each type of service auxiliary to insurance.
Within one year after the effective date of the amended Law on Insurance Business (i.e., by November 1, 2020), companies and individuals currently providing services auxiliary to insurance must satisfy the required conditions for providing such services. In other words, a company which wishes to provide services auxiliary to insurance must register with the relevant licensing authority to add such services to the company’s business lines. The addition of a business line in Vietnam is currently fairly straightforward. However, such company still needs to wait for the coming guiding legislation from the government and/or the Ministry of Finance.
For more details on the amended Law on Insurance Business, please contact us at [email protected].