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Ministry of finance The Socialist Republic of Vietnam
No 105 TC/DT Independence-freedom-Happiness
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Hanoi, 8th December 1994.
- Pursuant to Decree 100/CP dated 18th December 1993 of the Government on insurance business and concerning Circulars of the Ministry of finance;
The Ministry of finance provides guidance on insurance for construction projects as follows:
i. General Provisions
1. Investors in State-owned projects must have insurance for the construction.
for directly foreign invested projects, the application is decided by the foreign Investment Law in Vietnam.
2. The investors have to buy construction insurance from an insurance company that is permitted to operate in Vietnam. The insurance fee is a percentage of the project's investment capital.
3. Organizations signing construction contracts, consulting organizations buy insurance for their assets, equipment, offices and workshops serving construction, personal accident insurance, third-party liability insurance and insurance for experimental pr oducts and designs made during the project implementation. The insurance fee is included in production cost.
4. Construction insurance must be stated in the dossiers for bid-calling or the total estimated cost of the project.
ii. Specific provisions
1. Who must buy insurance (persons taking part in insurance):
- Investors in State-owned projects
- Organizations relating to construction investment projects under State ownership such as consultancy organizations in the fields of exploration, design, material supply and equipment and construction organizations.
2. forms of insurance.
2.1. for investors in State-owned projects:
While conducting investment and construction, investors have to buy the following insurance:
+ Insurance for construction materials and equipment that are under the investors' management, during transportation from the place of purchase to the project's location (for the items bought at CIf price the insurance is calculated from the receiving pla ce at home) and insurance for items being kept in storage. The fee is included in the items' price.
+ Insurance during project implementation, in case of sudden risk or damage such as fire, flood, earthquake, etc. The insurance fee is a part of the total cost of the construction project, and is calculated as a percentage of the project and is balanced i n the list of other expenses.
2.2. Organizations relating to state-owned projects have to buy the following insurance:
+ Insurance for assets under their management such as machinery and construction equipment.
+ Insurance for liability, including liability for life (death or casualty) and for the third-party's possessions during the time of construction; accident insurance (liability insurance for the organizations' staff during their time of being insured, lia bility insurance for the duties of investment consultancy organizations. The insurance fee is included in production or business costs, the products' prices or in other expenses of the organizations.
3. Mode of insurance purchase, settlement and compensation:
3.1. Insurance is bought from insurance companies permitted to operate legally in Vietnam.
3.2. formalities for insurance purchase: In case there is no other agreement between the insurance buyer and the person under insurance, formalities for insurance purchase are as follows:
a) for the investors: The investors buy insurance directly or entrust construction organizations to buy insurance. The buyer has to submit the following dossiers:
+ Contracts on purchasing equipment and materials .
+ Diagram of the project surface.
+ In written form, a summary of the design, with specifications and measurements.
+ Documents relating to climatic, geological and hydro-graphic conditions of the project's location.
+ The extract of the insurance part stipulated in the construction contracts.
+ The total estimate of the approved projects or bid-price.
+ Other formalities requested by the insurance regulations.
Pursuant to the above mentioned dossiers, the insurance companies consider, fix the insurance fee and grant insurance certificates in connection with insurance application forms to the investors.
b) for other organizations relating to construction contracts:
Insurance buyers must submit the following dossiers:
+ The list of quantity and value of the construction machinery and equipment for the projects.
+ The lists of those who buy insurance
+ The lists of investment projects realized by organizations in the last 5 years.
+ The estimates of assets damage that will probably happen during construction.
The insurance companies consider, appraise and fix insurance fees and grant insurance certificates in connection with the insurance application forms.
3.3. Insurance fee settlement:
- Regarding insurance for commodities, assets, materials and equipment: Insurance fees must be fully settled on time, in accordance with the stipulations in the insurance contracts.
- Regarding construction insurance: Insurance fees can be settled once or many times, depending on the projection for the year.
- Other insurance and fees must be settled once.
3.4. Compensation:
- In case of problems belonging to insurance responsibility, the person covered by the insurance must inform his/her insurance company of the problems immediately and within the next 7 days must state the details in writing to his/her insurance company.
- The insurance companies have to send cadres or professional experts (if necessary) to find out the reason and value of damages.
- Insurance companies have to compensate, following regulations and articles provided in insurance contracts.
iii. Performance regulations
- for investment projects funded by the State Budget and Credit Organizations, the Government must give them priority to buy insurance in the State Insurance Enterprises of Vietnam.
- Insurance companies wishing to run insurance as stipulated in this Circular, have to submit their lists of insurance regulations and fees to the Ministry of finance for approval.
This Circular comes into effect from the date of its promulgation. While implementing this Circular, if there are any misgivings, the ministries and People's Committees of provinces and cities should inform the Ministries of finance for resolution.
for The Ministry of finance Vice Minister
NGUYEN SINH HUNG