What are the conditions for implementing compulsory insurance in construction investment operations? How much is sum assured in construction investment oparetions in Vietnam?
What are the conditions for implementing compulsory insurance in construction investment operations in Vietnam?
According to the provisions of Article 7 of Decree 119/2015/ND-CP on insurance enterprises and reinsurance enterprises, the conditions for implementing compulsory insurance in construction investment operations must satisfy the following:
"Article 7. Conditions with respect to insurance enterprises and reinsurance enterprises
Insurance enterprises and reinsurance enterprises shall be allowed to sell compulsory insurance for construction investment activities provided that they meet the following conditions:
1. Hold permits for establishment and operation in which property and loss insurance, liability insurance (with respect to insurance enterprises), and non-life reinsurance (with respect to reinsurance enterprises), are licensed.
2. Meet requirements as to financial capability and professional competence of staff members as prescribed by the Law on Insurance Business and other instructional documents."
According to the provisions of Article 8 of Decree 119/2015/ND-CP, the conditions for implementing compulsory insurance in construction investment activities for reinsurance enterprises and foreign reinsurance organizationsmust be respond as follows:
"Article 8. Conditions with respect to reinsurance assuming enterprises or foreign reinsurance assuming organizations
As for outbound reinsurance activities, insurance enterprises and reinsurance enterprises must provide reinsurance for reinsurance assuming enterprises and foreign reinsurance assuming organizations that meet the following conditions:
1. Legally operating within the territory of the country where these enterprises' main offices are located.
2. Attain the minimum rank of “BBB” accredited by Standard & Poor’s or “B++” accredited by A.M.Best or the equivalent ranks accredited by other organizations that have competence and experience in rating in the financial year closest to the reinsurance assuming year."
What is the level of compulsory insurance liability retained in construction investment oparetions in Vietnam?
According to the provisions of Article 9 of Decree 119/2015/ND-CP on the level of compulsory insurance liability retained in construction investment oparetions as follows:
"Article 9. Retained liability
In order to ensure the financial safety for insurance enterprises and reinsurance enterprises and interests offered to insurance buyers, in reliance on financial capability and risk assessment result, insurance enterprises and reinsurance enterprises shall decide to provide compulsory insurance or reinsurance for construction investment activities as follows:
1. Retained liability per each risk or single loss or damage shall not exceed 10% of the owner’s equity.
2. If an insurance enterprise cedes reinsurance under a fronting arrangement, the maximum rate of such reinsurance cession is 90% of total insurance coverage."
How much is sum assured in construction investment oparetions in Vietnam?
According to the provisions of Article 10 of Decree 119/2015/ND-CP (amended and supplemented by Clause 7 Article 1 of Decree 20/2022/ND-CP) and Clause 2, Article 11, Clause 2, Article 19 of Circular 329 /2016/TT-BTC on sum assured for each type of insurance as follows:
1. With respect to insurance for works in progress: The sum assured is the full value of construction works upon completion but shall not be allowed to be lower than total construction contract value, including the value subject to amendments or revisions (if any).
2. With respect to professional liability insurance for construction investment consultancy: The sum assured equals consultancy and design contract value.
3. With respect to insurance for employees working at construction sites: The sum assured equals VND 100 million/policyholder/case. The specific coverage provided for employees that suffer injury or death caused by work accidents or occupational diseases shall be governed under the direction of the Ministry of Finance.
4. With respect to compulsory third-party civil liability insurance:
a) The minimum sum assured regarding damage of health or life is 100 million VND/person/case, not limiting the number of cases of damage or losses.
b) The minimum sum assured regarding damage of assets or related legal costs (if any) is:
- 10% of the value of the works for the entire valid duration of the insurance regarding works valued at less than 1.000 billion VND, not limiting the number of cases of damage or losses.
- 100 billion VND for the entire valid duration of the insurance regarding works valued at 1.000 billion VND or more, not limiting the number of cases of damage or losses.
5. The minimum sum insured must be equal to the value of the consulting contract for construction surveying and/or consulting contract for construction design.
6. The sum assured of a construction works in the construction period as stipulated in clause 1 of this Article is the full value of that works as it is completed, including costs of materials, labor, installations thereof, freights, taxes, other expenses and other work items provided by the investor. The minimum sum assured of a construction works in the construction period shall not be lower than the total value of the construction contract, including the additional and adjusted prices ( if any)
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