Summary of subjects who are required to purchase professional liability insurance in Vietnam

Summary of subjects who are required to purchase professional liability insurance in Vietnam (Internet image)

1. Insurance brokerage enterprises in Vietnam

According to Point c of Clause 2 of Article 8 of the Law amending Law on Insurance Business, the compulsory insurance shall include insurance brokerage enterprises’ professional liability insurance. At the same time, Article 92 of the Law amending Law on Insurance Business also stipulates that the insurance brokerage enterprises shall have to buy professional liability insurance for their insurance brokerage activities at insurance enterprises operating in Vietnam.

Note: According to Article 89 of the Law amending Law on Insurance Business, the insurance brokerage enterprises are those which perform the insurance brokerage activities under the provisions of the law. Insurance brokerage businesses are entitled to insurance brokerage commissions; insurance brokerage commissions are included in insurance fees. Buying professional liability insurance is to limit cases such as: employees giving wrong advice to customers, choosing inappropriate insurance packages, etc.

2. Valuation enterprise in Vietnam

According to Point d of Clause 2 of Article 42 of the Law on Price, Clause 1 of Article 6 of Circular 38/2014/TT-BTC of the Ministry of Finance, the valuation enterprise is required to purchase professional liability insurance or set up the professional risk reserve fund, which is the source for paying compensation for damage (if any) suffered by users of valuation results. Users of valuation results are clients who are offered the valuation service or the third party who concerns the valuation results as certified by the client and specified in the valuation contract by the valuation enterprise.

At the same time, the valuation enterprise may purchase professional liability insurance from insurers or branches of foreign non-life insurance enterprises that legally operate under the laws of Vietnam.

3. Auditing firms, branches of foreign auditing firms in Vietnam

According to Clause 5, Article 29 of the Law on Independent Audit, auditing firms, branches of foreign auditing firms in Vietnam are obliged to purchase professional liability insurance for practicing auditors or to set up professional risk reserve fund in accordance with provisions of the Ministry of Finance.

In particular, Clause 9, Article 59 of the Law on Independent Audit stipulates that in case of commiting violation of purchase of professional liability insurance, auditing firms, branches of foreign auditing firms may be subject to administrative sanction according to the provisions of law.

4. Notarial practice organizations in Vietnam

Clause 5, Article 33 of the Law on Notarization stipulates that notarial practice organizations are obliged  purchase professional liability insurance for their notaries. Notarial practice organizations include notary bureaus and notary offices organized and operating under the Law

Note: Professional liability insurance for notaries is compulsory insurance. The purchase of professional liability insurance for notaries shall be maintained throughout the operation duration of a notarial practice organization.

5. Law-practicing organizations in Vietnam

According to Clause 6, Article 40 of the Law amending Law on Lawyers, the law-practicing organizations are obliged to purchase professional liability insurance for its lawyers in accordance with the insurance business law. Article 32 of the Law amending Law on Lawyers, the forms of law-practicing organizations include Lawyers' offices and Law firms.

Lawyers' offices and Law firms are required to purchase professional liability insurance for its lawyers.

6. Consultancy contractors in Vietnam

According to Point b, Clause 2, Article 9 of the Law on Construction, consultancy contractors shall buy construction investment consultancy professional liability insurance for construction survey and construction design of construction works of grade II or higher grade

Purchasing professional liability insurance will protect investors when unexpected problems occur such as: Construction architecture does not meet functional requirements, technical design, construction drawing design, detailed estimates, insufficient amount of concrete, etc.

7. Securities companies, fund management companies in Vietnam

According to Clause 7, Article 71, Clause 1, Article 72 of the Law on Securities (expiring from January 1, 2021), securities companies and fund management companies are obliged to purchase professional liability insurance for securities trading operations at the company or to set up an investor protection fund to compensate investors for losses due to technical problems and the negligence of employees.

Note: From January 1, 2021, the Law on Securities 2019 will takes effect. Securities companies and fund management companies will no longer be required to purchase professional liability insurance.

In addition to the cases where professional liability insurance is required to be purchased above, other professions related to consulting and potentially risky for customers are also encouraged to participate such as: Study abroad consulting office, Real estate company, Design company, Professional service company related to customers,...

Le Vy

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