From Maturity to Momentum: Insurance Regulation in Taiwan and Vietnam

Episode Summary

In this episode of “The Standard Formula” global prudential solvency series, host Robert Chaplin is joined by colleagues Connor Williamson and Dev Jain to examine the prudential solvency regimes of Taiwan and Vietnam. Together, they explore Taiwan's capital adequacy regime under the Taiwan Insurance Capital Standard, currency risk challenges facing life insurers, market entry requirements in both jurisdictions and policyholder protection mechanisms. They also examine Vietnam's ambitious growth agenda, as well as the country’s push to establish International Financial Centers in Ho Chi Minh City and Danang to attract foreign investment and become a regional financial hub.

Key Points

• Taiwan has implemented the Taiwan Insurance Capital Standard (TWICS), which aligns with the International Association of Insurance Supervisors' ICS 2.0. Insurers must maintain a ratio of total adjusted net capital to risk-based capital of at least 100%, with a tiered regulatory intervention ladder applied to firms falling below that threshold.
• Approximately 70% of Taiwanese life insurers' invested assets are held in foreign currency, predominantly U.S. dollar-denominated bonds, creating a significant mismatch against their New Taiwan dollar liabilities. In response to sharp Taiwan dollar appreciation in 2025, the country’s insurance regulator introduced new rules allowing insurers to use additional reserves to offset foreign exchange losses, with 10 insurers adopting the new reserve rules.
• Vietnam welcomes foreign investment with no statutory caps on foreign ownership, and a commercial presence can be established through joint ventures, wholly foreign-owned enterprises, acquisitions or foreign branches — though branches cannot carry out life insurance business. Vietnam's 2025 amendments set out a roadmap for a risk-based capital regime, which will become mandatory starting in 2031.
• Insurers, reinsurers and foreign branches operating in Vietnam must contribute annually to a compulsory reserve fund at 5% of after-tax profits, capped at 10% of charter capital, providing a safety net for policyholders in the event of insolvency.
• Vietnam’s government has established two international financial centers in Ho Chi Minh City and Danang that are designed to attract foreign capital, foster innovation and offer fast-track licensing and sandbox approvals.

Voiceover (00:01):
From Skadden, The Standard Formula is a Solvency II podcast for UK and European insurance professionals. Join us as Skadden partner Robert Chaplin leads conversations with industry practitioners and explores solvency two developments that matter to you.

Robert Chaplin (00:17):
Welcome back to The Standard Formula. I'm delighted to be joined today by my colleagues, Connor Williamson and Dev Jain. This episode continues our global series on prudential requirements, forming part of our forthcoming encyclopedia of prudential solvency. In today's episode, we turn our attention to two dynamic jurisdictions; Taiwan, a sophisticated insurance market known for its robust regulatory framework, dynamic market growth and recent challenges around currency risk and capital adequacy, and Vietnam, a rapidly evolving insurance market with recent regulatory reforms, strong economic growth and a government vision to position the country as a regional financial hub. Before looking into the regulatory landscapes, we'd like to thank our good friends at Lin & Partners in Taiwan and Frasers Law Company in Vietnam for their invaluable insights and support in preparing this podcast.

(01:14):
Connor, let's start with Taiwan. Can you give us an overview of the sector, please?

Connor Williamson (01:18):
Thanks, Rob. Absolutely. So, Taiwan's insurance sector is a fascinating case study in regulatory evolution and market resilience. Over the past two decades, the market has matured rapidly with the Financial Supervisory Commission, or FSC, at the helm as the primary regulator. The FSC oversees licensing, supervision, solvency and market conduct for all insurance entities, including life, non-life and reinsurance companies, as well as intermediaries like brokers and agents.

Dev Jain (01:45):
That's right, Connor. To give you a sense of scale, as of 2025, Taiwan's general insurance market is projected to reach 308.8 billion new Taiwan dollars in gross written premiums, which is around US$9.8 billion, with a compound annual growth rate of nearly 8% expected through 2029. Motor insurance is the largest segment, accounting for almost half of all non-life premiums followed by property insurance, which has seen a surge in demand due to recent natural disasters and heightened risk awareness. The life sector meanwhile is facing headwinds from currency volatility and capital pressures, but remains a key pillar of Taiwan's financial system. Despite these challenges, the market is well-capitalized, with the total insurance sector assets exceeding new Taiwan dollar 21 trillion by mid-2025, which is around US$670 billion. The sector is also highly internationalized, with significant foreign investment and a large proportion of assets held in overseas securities, particularly by life insurers.

(03:08):
Taiwanese life insurers face substantial currency mismatches as a majority of their new Taiwan dollar liabilities are backed by U.S.-dollar assets. Approximately, 70% of their invested assets are in foreign currency predominantly U.S. dollar-denominated bonds. This imbalance in the denomination of invested assets therefore renders Taiwanese insurers highly vulnerable to future appreciation of the new Taiwan dollar.

Robert Chaplin (03:39):
Thank you, Dev. Now that we have some context as to how the market is doing, let's look at what it takes to enter the Taiwanese insurance market. Connor, can you walk us through the forms of investment and market entry requirements?

Connor Williamson (03:52):
Yeah, absolutely, Rob. So, the regulatory environment is designed to ensure both market stability and openness to international participation. The sector is split between life and non-life insurers. Composite licenses aren't available for direct insurers, but are permitted for reinsurers. Taiwan is open to both domestic and foreign investment and insurance, with no formal restrictions on foreign direct investment. Both subsidiaries and branches of foreign insurers can operate in Taiwan, subject to strict entry requirements and ongoing supervision from the FSC. Foreign insurance that has been in operation for more than three years must have sound business and financial ability and have no record of material violation of laws and regulations of the past three years in order to be permitted to establish a branch. If the foreign insurer has been in operation for less than three years, it must establish a representative office within Taiwan for at least one year before establishing a branch, and during that time needs to have no record of material violation of laws and regulations since the establishment.

(04:51):
In addition to, either having paid-in capital of more than 2 billion Taiwan dollars (around US$64 million) or meet the FSC's credit rating requirements, foreign insurance enterprise should also set aside minimum working capital in Taiwan for each branch in accordance with its business plan, amounting to not less than 50 million Taiwan dollars equivalent to US$1.6 million, and equally post-bond with the National Treasury in Taiwan in an amount equal to 15% of its working capital. Overall, the licensing process is comprehensive, typically taking six months to one year and requires the submission of a detailed business plan, proof of financial soundness and evidence of qualified management. Prior to licensing, promoters must contribute at least 20% of the minimum paid-in capital at the time of the application and a bond equal to 50% of paid-in capital should be deposited with the National Treasury.

(05:43):
Then, within three months of the registration of incorporation of its Taiwan branches granted, the insurance enterprise shall submit the documents stipulated under Article 11 of the regulations for establishment and administration of insurance enterprises and apply to the FSC for the business license, which usually would take around one-to-two months to be received. It's also worthwhile noting that unless they've received explicit consent from the FSC, the insurance enterprise may not engage concurrently in any other business apart from that for which they have applied.

Dev Jain (06:15):
And once the insurer or reinsurer is established and licensed, there are also detailed control and ownership rules. Any acquisition of more than 10%, 25% or 50% of an insurer's voting shares requires prior FSC approval, and holding above 5% must be reported to the regulator within 10 days. Any subsequent and cumulative increase or decrease of more than 1% must similarly be notified to the FSC. These thresholds apply to both direct and indirect holdings, including those by related parties. Shares held by nominees and related parties are aggregated for the purpose of assessing whether the limits have been reached.

(07:03):
Rob, would you be able to walk us through the minimum capital requirements and capital standards that insurers and reinsurers must meet in Taiwan? It would be helpful to understand how these financial thresholds are set and what ongoing obligations apply once a company is licensed.

Robert Chaplin (07:23):
Definitely, Dev. Let me set out a few numbers for you. On the capital side, Taiwan's minimum paid-up capital requirements are as follows. For insurance companies, life or non-life, it's 2 billion Taiwanese dollars, around US$64 million. For insurance or reinsurance brokers, 20 million new Taiwanese dollars, which is around US$640,000. For brokers operating both insurance and reinsurance businesses, 30 million new Taiwanese dollars, which is around US$960,000. For insurance agents, 10 million new Taiwanese dollars, which is around US$320,000.

(08:09):
As mentioned earlier, for foreign insurers with less than three years of operation, the minimum paid-up capital is also $2 billion new Taiwanese dollars, around US$64 million, or they must meet the FSC's credit rating requirements. A foreign insurance enterprise has to have a credit rating of at least A-minus from S&P, at least A3 from Moody's, at least A from Fitch ratings, at least TWA+ from Taiwan Ratings Corporation, or an equivalent rating or better from any other credit rating agency recognized by the competent authority.

(08:47):
But, capital adequacy isn't just about minimum threshold. Taiwan has implemented the Taiwan Insurance Capital Standard, TWICS, which aligns with the International Association of Insurance Supervisors’ ICS 2.0. An insurance company must maintain a ratio of total adjusted net capital to its risk-based capital requirement of at least 100%, calculated pursuant to Taiwan insurance capital standard, TWICS, and a net worth ratio calculated as owner's equity divided by total assets, excluding separate accounts for investment-linked insurance specified in the financial report audited by a certified public accountant of at least 3% in at least one of the last two periods.

(09:34):
The FSC also enforces a capital adequacy ratio of 100% or above, with a tiered intervention ladder for lower ratios. Inadequate capital, 50% to 100%, significantly inadequate capital, 25% to 50%, and seriously inadequate capital lower than 25%. Depending on the level of the capital adequacy, the FSC may take measures such as ordering the insurance enterprise or its responsible person to propose a plan for the capital increase, order the insurance enterprise to cease selling insurance products, or to restrict its launch of new insurance products, restrict the scope of the capital utilization, restrict the remuneration paid to its responsible person, assume conservatorship or receivership over the insurance enterprise, order the enterprise to suspend and wind up the business, or liquidate the enterprise.

(10:32):
So, what about the people running these firms? What are the fitness and propriety requirements for senior management in Taiwan, Dev?

Dev Jain (10:41):
The FSC imposes strict fit and proper requirements for responsible persons, including directors and general managers. The general manager must possess good moral character, leadership and the ability to effectively manage the insurance enterprise and meet education and experience requirements. For example, the general manager should at least graduate from a domestic or a foreign school at junior college level or equivalent education, have work experience in insurance enterprises for not less than nine years and serve as a manager for not less than three years. All appointments require FSC approval and the regulator can remove or sanction individuals for breaches of conduct or regulatory failures. The insurance enterprise shall submit the minutes of its board meeting for the appointment of its general manager and the documents to prove his or her qualifications to act as a general manager with FSC's review and approval before he or she can take up the position.

Connor Williamson (11:55):
And on a separate note, in addition to robust governance standards from senior management, Taiwan's insurance regulatory framework places significant emphasis on safeguarding the interest of consumers and maintaining market stability. Policyholder protection is another cornerstone of Taiwan's regime. In particular, the Stabilization Fund, a private organization sponsored by insurers, is designed to safeguard policyholders interest. It can provide loans to troubled insurers, advance claims payments if an insurer's unable to pay, and can make other payments as approved by the FSC. All insurers are required to contribute to the fund and the FSC can intervene in the cases of insolvency, including placing insurers into receivership or ordering liquidation. The functions of the stabilization fund, among others, include advancing the payment of insurance claims, which the insureds or the beneficiaries are entitled to under the effective insurance contracts where the insurance enterprise is placed into receivership, they can order the suspension of business and undergo rehabilitation, or they can order entities to be dissolved. Equally, they can exercise their powers when a receiver of the insurance enterprise applies to court for reorganization.

(13:04):
There's also robust consumer protection framework under the Financial Consumer Protection Act, which mandates fair contract terms, prohibits unfair or misleading practices and provides for ombudsman-led dispute resolution. If a financial consumer dispute arises, the insurer must respond within 30 days and unresolved cases can be escalated to an ombudsman body. The liability of an insurance enterprise to a financial consumer shall not be limited or exempted by parties. In advanced stipulation, if an insurance enterprise sets a regulation to limit or exempt its liability, then such stipulation at issue shall be invalid. Equally, contractual provisions entered into by insurance companies and a financial consumer, which are clearly unfair, shall also be invalid. If there is disagreement over the meaning of a contractual provision, then there is a presumption that the provision shall be interpreted in favor of the financial consumer.

Robert Chaplin (13:58):
Great. Let's talk now about reinsurance and risk management. Taiwan's regulations require insurers to establish risk management mechanisms for retained ceded reinsurance and assumed reinsurance business in consideration of its risk bearing capacity, and a draft reinsurance risk management plan, including, but not limited to the following particulars: retained risk management, ceded risk management, assumed reinsurance risk management and intragroup reinsurance risk management. Reinsurance can only be placed with reinsurers meeting strict credit rating criteria, typically BBB or higher from S&P, B++ from AM Best, BAA2 or higher from Moody's, BBB or higher from Fitch, TWA+ or higher from Taiwan Ratings Corporation, or an equivalent rating from any other rating agency recognized by the competent authority. There are also restrictions on cross-segment reinsurance. A non-life insurance enterprise shall not assume reinsurance ceded by life insurance enterprise and a life insurance enterprise should not assume reinsurance ceded by a non-life insurance enterprise except for pure reinsurers.

(15:17):
Dev, what about investments for insurers?

Dev Jain (15:20):
Rob, on the investment side, insurers face detailed restrictions on asset allocation. Besides bank deposits, funds can be invested in government and financial bonds, real estate, loans, public utilities, foreign investments, investment in insurance related businesses, derivatives transactions and other transactions as approved by competent authority. There are further restrictions on each of these categories under the Insurance Act. The FSC closely supervises investment activities, especially given the high proportion of foreign currency assets held by life insurers, which is about 70% of their portfolios are in foreign currency, mainly U.S. dollar-denominated bonds. This creates significant currency risk as highlighted by the sharp appreciation of the Taiwan dollar in 2025, which exposed insurers to large potential losses.

(16:21):
In response, the FSC introduced new rules allowing insurers to use additional reserves to offset foreign exchange losses and many insurers have increased their hedging ratios and shifted to more conservative investment strategies. The updated rules permit insurers to utilize additional reserves to counteract losses from currency fluctuations, particularly those resulting from the appreciation of the Taiwan dollar. The FSC reported 10 insurers have adopted new reserve rules, which are designed to help offset foreign exchange losses.

(16:59):
Connor, what about innovation in Taiwan?

Connor Williamson (17:02):
So, digital innovation is another area of real rapid development. The FSC has encouraged the growth of online insurance sales, regulatory sandboxes and the use of blockchain for claims and policy management. Internet-only insurers are now permitted, subject to a minimal capital requirement of new Taiwan dollars of 0.5 billion, around US$16 million, for non-life and new Taiwan dollars of 1 billion for life, which is around US$32 million. Equally, they must have a technology focused promoter and a robust business model. The business plan submitted by an internet-only insurance company should include customer AI identity verification mechanisms, information technology system, security controls, backup operations and a business continuity plan, in addition to an assessment to ensure the budget is sufficient to meet the needs of the information system and to operate business properly in the next five years. This is in addition, also required is a business model in relation to the insurance products and a market exit plan.

(18:05):
In the light of this digital development, looking ahead, Taiwan's insurance market is expected to continue growing driven by demographic trends, increased risk awareness and digital transformation. The general insurance sector is forecast to reach new Taiwan dollars of 418 billion, which is around US$13.3 billion, in gross written premiums by 2029, with motor, property and health insurance as key growth engines. However, the sector will need to navigate ongoing challenges around currency risks, capital adequacy and regulatory change.

Robert Chaplin (18:39):
Thank you, Connor. So, to sum up, Taiwan's prudential solvency regime is amongst the most rigorous in Asia, with a strong focus on capital adequacy, risk management, and policy holder protection. The FSC's proactive approach, combined with a dynamic market and ongoing innovation, positions Taiwan as a leading insurance jurisdiction in the region. Let's move on now to Vietnam.

(19:04):
Connor, can you kick us off please with an overview of Vietnam's insurance sector?

Connor Williamson (19:09):
Yeah, absolutely. So, if we look at how things have evolved, Vietnam's insurance sector has really transformed over the last 20 years or so. Prior to 2000, it was pretty much a state run market. BaoViet, Vietnam's state-owned insurer, held a monopoly and there were no private firms operating in the sector. However, as a result of the enactment of the 2000 Law on Insurance Business, which came into force on the 1st of April 2001, the market began its transition to what it is today. New rules came in for both life and non-life insurance, reinsurance and brokerage activities, and, for the first time, companies were permitted to participate in the insurance industry. Since then, the Vietnamese government has implemented incremental reforms, all aimed at gradually opening up the market and making it more competitive.

(19:54):
Today, Vietnam's primary insurance regulatory authority is the Ministry of Finance, which is responsible for licensing, supervision and inspecting insurance-related claims, as well as issuing regulations, setting financial safety standards and formulating national insurance development strategies. The Ministry of Finance is supported by the Insurance Supervisory Authority, which conducts regular and ad hoc supervision of insurers operations, focusing on solvency, capital, adequacy, risk management and compliance with disclosure and financial health requirements.

(20:26):
On the legislative side, the main legal instrument currently regulating insurance business is the Law on Insurance Business issued by Vietnam's National Assembly in 2022. We'll soon explore the most important requirements set out in the 2022 law together with recent amendments in 2025. It's also worth noting that since 2007, Vietnam has been a member of the International Association of Insurance Supervisors and is a contracting party to a number of treaties regulating cross-border insurance and reinsurance services, such as the EU Vietnam Free Trade Agreement, which regulates reinsurance.

(20:59):
Dev, could you give us a quick overview of Vietnam's insurance market, a few highlight numbers of where you think it's headed next? We could then dive into more technical matters.

Dev Jain (21:07):
Absolutely, Connor. The numbers really tell the story of Vietnam's growth. Vietnam's insurance sector has become an increasingly attractive destination for international investors and insurers, driven by robust market growth, regulatory liberalization and rising demand for insurance products. As of September 2025, Vietnam's insurance market includes 32 non-life insurance companies, one branch of foreign non-life insurer, 20 life insurance companies and two reinsurance companies, many of which are foreign-owned or have significant foreign investment.

(21:45):
In the first nine months of 2025, total insurance premium revenue reached approximately 171.7 trillion Vietnamese Dong, which is roughly equivalent to US$6.52 billion, with non-life insurance growing by over 10% year-on-year. The sector's assets have also significantly expanded, with total assets nearing Vietnamese Dong 1077 trillion, which is equal to US$41 billion, and technical reserves and owners equity both showing double-digit growth. The robust expansion is driven by a young, increasingly financially literate population and consequential rising demand for health, life and property insurance.

(22:34):
Despite this significant growth in recent years, insurance penetration still remains below 3% of the GDP, whereas the U.K., for example, has insurance penetration of 7.4% in 2024, which is broadly in line with major economies. The government has set certain growth targets and has a detailed agenda in place. For example, by 2030, 18% of the population to hold life insurance policies compared to 10% currently, and for overall insurance penetration to reach 3.5% of the GDP, the sector is therefore recognized as a key pillar for long-term economic resilience and capital market development. These ambitious growth targets, coupled with strong demographic growth, are amongst the main reasons why strategic reforms to Vietnam's insurance sector have been enacted, such as most recently the passing of a 2025 law amending and supplementing certain provisions of the 2022 Law on Insurance Business.

Robert Chaplin (23:39):
Thank you both. It's clear that Vietnam's growth targets are shaping the regulatory landscape. With that context, let's start with the basics and see what it actually takes to enter the market.

(23:49):
Connor, can you walk us through the forms of investment and market entry requirements in Vietnam?

Connor Williamson (23:54):
Of course. And look, I think it's fair to say that Vietnam is quite open to foreign investments and indeed there are no statutory caps on foreign ownership. Recent reforms have also streamlined the licensing process. In particular, the commercial presence of a foreign entity can be established either as a joint venture with a Vietnamese partner as a wholly foreign-owned enterprise, through the acquisition of a domestic company or through the establishment of a foreign branch in Vietnam of an overseas insurer. However, there's a key restriction. Foreign investors cannot establish a foreign branch to carry out life insurance business. They're only able to pursue non-life insurance or reinsurance business in Vietnam.

(24:32):
Overall, however, the licensing process is comprehensive, with the Ministry of Finance reviewing applications for completeness and substance and requiring detailed documentation on corporate structure, risk management, as well as internal controls to be submitted. Ultimately, the Ministry of Finance assesses each application based on financial capacity, business plan, governance and compliance of regulatory standards.

(24:55):
Dev, once a company decides to enter the market, how are the rest of the regulatory capital requirements to which it must comply? Can you walk us free the minimum capital levels for the principal types of insurers, reinsurers and intermediaries are required to maintain?

Dev Jain (25:09):
Of course, Connor. As you mentioned, current minimum capital levels depend on the business line. Let me set out some key minimum capital requirements for the main categories of insurance business. For life and health insurers, it is 750 billion Vietnamese Dong, which is approximately equivalent to US$29 million. For non-life and health insurance, minimum capital is 400 billion Vietnamese Dong, which corresponds to roughly US$15 million, and for full scope reinsurance carrying out life, health and non-life business, it is up to 1,400 billion Vietnamese Dong or around US$53 million. For insurance brokers conducting both direct insurance brokerage and reinsurance brokerage activities, the minimum capital requirement is 10 billion Vietnamese Dong, approximately US$380,000. On top of that, all insurers and reinsurers must pay, on escrow, a security deposit equivalent to 2% of the relevant required capital into a Vietnamese commercial bank. This deposit is only released upon termination of operations and can be used to meet policyholder obligations if solvency is inadequate.

(26:34):
These requirements are essentially designed to ensure that only very well-capitalized, stable entities operate in the market and the Ministry of Finance has the authority to reject applications that do not meet these standards or fail to address market needs. Clearly, this one-size-fits-all approach could have its limitations. The figures just mentioned are not immaterial and presumably prohibitive unless you are a larger organization that intends to write a significant amount of business. That said, Vietnam's capital requirements for insurance undertakings are set for substantial transformation. The 2025 amendments have also set out a roadmap for insurers and reinsurers to adopt a risk-based capital regime in parallel with the current one. From 2031 onwards, the risk-based capital regime will instead become mandatory. It is also worth noting that the capital requirements mentioned above apply where investors enter the market by establishing a local presence in Vietnam.

(27:40):
For those providing services on a cross-border basis, the financial capacity requirements are more stringent. Specifically, foreign insurers must have at least US$2 billion in total assets while the minimum for foreign brokers is US$100 million. Foreign insurers must maintain a statutory deposit of at least 100 million Vietnamese Dong, which is around US$3.8 million equivalent, at a licensed Vietnamese bank, and must provide a payment guarantee letter issued by that bank to guarantee capacity to settle claims that exceed the mandatory deposit amount. Foreign insurers must have a minimum credit rating of BBB from Standard & Poor or Fitch, B++ from AM Best or BAA1 by Moody's or an equivalent rating. And both foreign insurers and foreign brokers must have been profitable for three consecutive years.

(28:40):
Rob, nevertheless, capital is just one piece of the puzzle. What about people running these firms? Can you talk us through the fitness and proprietary requirements which apply to staff of insurers and reinsurers in Vietnam?

Robert Chaplin (28:54):
With pleasure, Dev. Senior managerial positions must be covered by qualified personnel who meet certain requirements. The most important conditions and standards required of key personnel are the following: members of the board, directors, and legal representatives must all hold a university degree or higher. They must also not have been subject to administrative sanctions in the field of insurance business in the three years prior to appointment or be under prosecution at the time of the appointment. They must also have at least three years of direct experience in the insurance, finance or banking sector, or five years for directors and legal representatives, or three years in managerial or controlling positions in organizations operating in the same sectors more broadly. But, it's not just about who's in charge, beyond qualifications and fitness and propriety requirements imposed on key personnel. Policyholder protection is also a cornerstone of Vietnam's regulatory framework.

(29:53):
Connor, why don't you give us a brief overview of the main initiatives in place to guarantee customers are adequately protected.

Connor Williamson (30:00):
Thanks, Rob. Sure. So on the policyholder side, one of the key protections is the Compulsory Reserve Fund, which insurers, reinsurers and foreign branches must contribute. The idea is to effectively have a safety net for policyholders if an insurer becomes insolvent or bankrupt. Contributions to the protection fund are made on an annual basis at 5% of after-tax profits and the max amount of the levy is capped at 10% of the entity's charter capital. Dividends and other returns as capital cannot be paid to shareholders unless this requirement is satisfied.

Robert Chaplin (30:30):
And, building on that, from the 1st of January 2031, new bankruptcy procedures for insurance companies will take effect. These rules prioritize compensation payments and policyholder claims ahead of other creditors, ensuring that policyholders are at the front of the line if an insurer fails. The regulatory framework also requires strong corporate governance, internal controls and risk management. Insurers must establish internal audit and risk management functions, conduct annual assessments of their control systems and report any unusual events or solvency concerns to the Ministry of Finance. In their entirety, these requirements are designed to promote transparency, accountability and resilience in the sector.

Dev Jain (31:13):
And it's also worth mentioning, on the other hand, that Vietnam is not a member of the Financial Action Task Force and is currently on their Gray List. So, anti-money laundering and financial crime prevention remains areas of ongoing regulatory focus.

Robert Chaplin (31:29):
Good point, Dev. All of these measures and regulations, however, should be seen as part of a bigger vision. Looking ahead, Vietnam is making a major push to become a regional financial hub. The government has established two international financial centers, or IFCs, one in Ho Chi Minh City and one in Danang, each under a dedicated regulatory framework. These IFCs are designed to attract international capital, foster innovation in financial services and support the development of digital and green finance. The IFCs will operate as unified entities with their own executive supervisory and dispute resolution authorities and will offer regulatory clarity, fast-track licensing and sandbox approvals for new technologies and business models. The IFCs are structured to support a wide range of financial activities including banking, securities, asset management, fintech and insurance. While Ho Chi Minh City's IFC is focused on building a comprehensive financial ecosystem, Danang's IFC is more orientated towards digital innovation and sustainable finance.

(32:38):
Both centers will feature controlled testing environments for new financial models and the government is committed to reviewing their operational efficiency after five years to ensure they remain competitive and responsive to market needs.

Dev Jain (32:52):
And in the near-term, the government is prioritizing infrastructure, human resources and the development of a modern finance ecosystem within each IFC. This includes promoting new trading platforms, digital asset exchanges and international standard advisory services. The IFCs are therefore expected to play a key role in attracting foreign insurers, reinsurers and brokers, and in supporting the growth of digital and green insurance products.

(33:24):
Rob, having reviewed the key regulatory requirements expected of market participants and the main reforms likely to shape the future trajectory of the Vietnamese market, do you have any final remarks on this interesting jurisdiction?

Robert Chaplin (33:39):
Yes, certainly. To sum up, we've seen that Vietnam's insurance market is evolving rapidly with significant regulatory reforms aimed at aligning with international standards, promoting competition and protecting policyholders. The establishment of IFCs, coupled with a focus on innovation and consumer protection, are also further positioning Vietnam as a key player in the region. As the sector continues to grow and modernize, we can and should expect to see increased foreign investment, greater product diversity and a stronger emphasis on risk management and policyholder protection.

(34:15):
That brings us to the end of today's episode on prudential regulation in Taiwan and Vietnam. Thank you, Connor and Dev, for your insights. Please join us next time.

Voiceover (34:26):
Thank you for joining us on The Standard Formula. If you enjoyed this conversation, be sure to subscribe in your favorite podcast app so you don't miss any future episodes. Additional information about Skadden can be found at skadden.com. The Standard Formula is a podcast by Skadden Arps, Slate, Meagher & Flom LLP, and affiliates. Skadden is recognized for its deep experience in representing insurance and reinsurance companies and their advisors on a wide variety of transactional and regulatory matters. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.