Regulations on revenues of compulsory fire and explosion insurance that serve fire prevention and firefighting in Vietnam

Regulations on revenues of compulsory fire and explosion insurance that serve fire prevention and firefighting in Vietnam (Internet image)

Regarding this matter, LawNet would like to answer as follows:

1. Regulations on revenues of compulsory fire and explosion insurance that serve fire prevention and firefighting in Vietnam

According to  Clause 3, Article 10 of Decree 23/2018/ND-CP (amended in Decree 97/2021/ND-CP), the revenues of compulsory fire and explosion insurance that serve fire prevention and firefighting in Vietnam shall be used as follows:

- Funding for fire prevention and firefighting equipment and facilities for the Fire department. Spend no more than 65% of actual revenues of compulsory fire and explosion insurance collected by insurance enterprises for this purpose in a financial year.

- Funding for publicizing, popularizing the law and knowledge regarding fire prevention, firefighting, and compulsory fire, explosion insurance. Spend no more than 15% of actual revenues of compulsory fire and explosion insurance collected by insurance enterprises for this purpose in a financial year.

- Funding for the Fire department for implementation of: Investigating causes of fire; providing professional training, conducting fire safety and fire prevention inspection; supervising participation in compulsory fire and explosion insurance of facilities facing a risk of conflagration.

Spend no more than 15% of actual revenues of compulsory fire and explosion insurance collected by insurance enterprises for this purpose in a financial year.

- Funding for commending achievements of organizations and individuals directly participating and cooperating in fire prevention and firefighting operations.

Spend no more than 5% of actual revenues of compulsory fire and explosion insurance collected by insurance enterprises for this purpose in a financial year.

In addition, according to Clause 4, Article 10 of Decree 23/2018/ND-CP, the collected premiums for compulsory fire and explosion insurance for fire prevention and fighting purposes that remain after completing the tasks above shall be carried over the succeeding year.

2.1. Compulsory fire and explosion insurance premiums and deductibles in Vietnam

2.1. Compulsory fire and explosion insurance premium in Vietnam

According to Clause 1, Article 7 of Decree 23/2018/ND-CP (amended in Decree 97/2021/ND-CP), the insurance premiums specified in Section I, Appendix II enclosed with Decree 23/2018/ND-CP (amended in Decree 97/2021/ND-CP) shall be applied to the insured facilities. To be specific:

+  If the total sum insured on a single facility (except nuclear facilities) is less than VND 1,000 billion, the insurance premiums are provided in Clause 1, Section I, Appendix II of Decree 23/2018/ND-CP (amended in Decree 97/2021/ND-CP).

The insurer and the policyholder may increase the insurance premiums applied to each insured facility according to its risk level and regulations of law.

+ If the total sum insured on a single facility (except nuclear facilities) is VND 1,000 billion or over or the insured facility is a nuclear facility, the insurer and the policyholder shall reach an agreement on the insurance premiums in accordance with regulations of law and with the reinsurer’s approval.

+ For nuclear facilities: Insurance enterprises and policyholders shall agree on insurance premiums on the basis of approval of reinsurers”.

2.2. Compulsory fire and explosion insurance deductible in Vietnam

According to Clause 1, Article 7 of Decree 23/2018/ND-CP (amended in Decree 97/2021/ND-CP), tA deductible is the amount of money a policyholder must pay upon the occurrence of each insured event, specified in Section II, Appendix II of Decree 23/2018/ND-CP (amended in Decree 97/2021/ND-CP), specifically as follows:

- If the total sum insured on a single facility (except nuclear facilities) is less than VND 1,000 billion, the deductible is provided in Clause 1, Section I, Appendix II of Decree 23/2018/ND-CP (amended in Decree 97/2021/ND-CP).

The insurer and the policyholder shall enter into an insurance contract specifying the deductible applied to each insured facility according to its risk level and history of losses.

- If the total sum insured on a single facility (except nuclear facilities) is VND 1,000 billion or over or the insured facility is a nuclear facility, the insurer and the policyholder shall reach an agreement on the deductible with the reinsurer’s approval.

Vo Van Hieu

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