Circular No. 329/2016/TT-BTC dated December 26, 2016 of the Ministry of Finance guiding the implementation of a number of Articles of the Decree No. 119/2015/ND-CP dated November 13, 2015 of the Government prescribing compulsory insurance in construction investment activities

THE MINISTRY OF FINANCE

Circular No. 329/2016/TT-BTC datedDecember 26, 2016 of the Ministry of Finance guiding the implementation of a number of Articles of theDecree No. 119/2015/ND-CP dated November 13, 2015 of the Government prescribing compulsory insurance in construction investment activities

Pursuant to the Law No. 24/2000/QH10 on Insurance Business;

Pursuant to the Law on amendment and supplement to a number Article of the Law No.61/2010/QH12 on Insurance Business;

Pursuant to the Law No.50/2014/QH13 on Construction;

Pursuant to the Government s Decree No. 215/2013/ND-CP dated December 23, 2013 defining the functions, rights, responsibilities and organizational structure of the Ministry of Finance;

Pursuant to the Government’s Decree No.119/2015/ND-CP dated November 13, 2015 on compulsory insurance in construction activities;

Upon request of the Director of the Agency for Insurance Supervisory and Management;

The Minister of Finance hereby issues this Circular on guiding the implementation of a number of Articles of theDecree No. 119/2015/ND-CP dated November 13, 2015 of the Government prescribing compulsory insurance in construction investment activities

Chapter I

GENERAL PROVISIONS

Article 1. Scope of adjustment

This Circular provides guidelines for:

1.Regulations, provisions, schedules of premiums, financial regime and reporting regime for compulsory insurance for construction activities including construction works insurance, professional liability insurance for construction consultants (hereinafter referred to as “professional liability insurance”) and construction Labors’ compensation insurance.

2.The implementation of civil liability insurance for the third party

Article 2. Subjects of application

This Circular applies to:

1.Investors and contractors (if the construction works insurance premium is included in the contract value).

2.Consultancies

3.Construction contractors.

4.Non-life insurance enterprises, branches of foreign non-life insurance enterprises (hereinafter referred to as “insurer”) and ceding companies.

5.Other entities related to compulsory insurance for construction activities.

Article 3. Interpretation

For the purpose of this Circular, terms herein shall be construed as follows:

1.Handovermeans transfer of a construction works as defined in Article 124 of the Law on Construction.

2. Contract holderrefers to the following entities:

a) Investors (as for the construction works insurance).

b) Consultancies (as for the professional liability insurance).

c) Construction contractors (as for the construction Labors’ compensation insurance)

3.Third party (forthe professional liability insurance for construction insurance) is the party suffering from bodily injuries or property damage a result of construction design and surveying, except for the insurer, the contract holder and the insured.

4.Occupational diseaseis defined by Article 143 of the Labor Code.

5.Investormay be an owner or contractor participating in construction investment activities (if the construction works insurance premium is included in the contract value).

6.Project owneris any entity who has capital or mobilizes capital or is designated to directly manage and use a certain amount of capital for construction of a construction works and work item affecting the community safety, or construction works having significant impact on the environment or having particular specifications and being constructed under complicated conditions as stipulated in clause 1 Article 4 of the Government’s Decree No.119/2015/ND-CP dated November 13, 2015 on compulsory insurance for construction activities (hereinafter referred to as "Decree No.119/2015/ND-CP).

7.Construction works in the construction periodis the construction works stipulated in clause 10 Article 3 of the Law on Construction

8.Place into serviceis the process for bringing a construction works into operation.

9.Deductibleis a fixed amount or a percentage of an indemnity that the contract holder must bear in each insured event. To be specific:

a) As for the construction works insurance: the deductible specified in item c, point 1, clause I of Appendix 7 attached hereto (in case of any construction works prescribed in point a, clause 1 Article 15 hereof) or item c, point 1, clause II of Appendix 7 attached hereto (in case of any construction works prescribed in point b, clause 1 Article 15 hereof) shall apply.

b) As for the professional liability insurance: the deductible stipulated in point b clause 1 Appendix 8 attached hereto shall apply.

10.Consultancy isany contractor providing expert advices on survey and design of grade II construction works or higher.

11.Construction contractoris any entity that meets eligibility requirements for construction and has the capability to operate in construction industry under the construction contract as stipulated in clause 1 of this Article.

12.The insuredrefers to the following entities:

a) Project owners, construction contractors (both principal contractors and sub-contractors), and other entities whose interests and entitlement are connected with the construction works during the construction period (for the construction works insurance).

b) Consultancies and other entities participating in giving expert advices on construction surveying and design (for the professional liability insurance).

c) Prime construction contractors and their subcontractors (for the construction Labors’ compensation insurance)

13.Laboris any entity defined by clause 1 Article 3 of the Labor Code.

14.Occupational accidentis defined in Article 142 of the Labor Code.

15.Construction incidentis defined in clause 34, Article 3 of the Law on Construction.

Article 4. Principle, insuring clauses and schedules of premiums of compulsory insurance for construction activities

1.Principle is a set of rules constituted by insuring clauses on compulsory insurance for construction activities stipulated herein

2.Insuring clause is a specific provision in compulsory insurance for construction activities policy, including:

a) Insuring clause on construction works insurance

b) Insuring clauses on professional liability insurance.

c) Insuring clauses on construction Labors’ compensation insurance.

3.The schedule of premiums and surcharges shall be specified as follows:

a) As for the construction works insurance: provisions in Appendix 7 attached hereto shall apply.

b) As for the professional liability insurance: provisions in Appendix 8 attached hereto shall apply

c) As for the construction Labors’ compensation insurance: provisions in Appendix 7 attached hereto shall apply

4.In addition to purchase of compulsory insurance for construction activities under insuring clauses and at the premiums and minimum assured sum  stipulated hereof, the insurer and contract holder shall negotiate to make an expansion to insuring clauses and heighten the sum insured and premiums in the insurance contract in accordance with regulations of laws.

Article 5. Exclusions

1.The insurer shall be freed from the liability to indemnify for the following loss:

a) Loss caused by intentional acts. To be specific:

-Loss incurred due to riots, strikes and hostilities

-Loss caused by intentionally illegal acts committed by the contract holder or the insured ( this provision shall not apply to construction Labors’ compensation insurance in case any construction Labor takes any self-defense act or takes actions to save people, asset or uses stimulants under doctor s prescription).

-Loss caused by the consultants’ errors in design ( this provision shall only apply to construction works insurance).

-Loss caused by consultancy’ intentional acts of selecting untested methods of construction, measurement, calculation and design, and untested materials; or consultancy’ advice on use of asbestos or materials containing asbestos ( this provision shall only apply to the professional liability insurance for consultants).

b) Loss caused by the nature. To be specific:

-Loss due to corrosion, abrasion, redox, rot, hardness (such as rust,  scaling and the like), material defects ( this provision shall only apply to construction works specified in point a clause 1 Article 15 hereof).

-Loss due to corrosion, abrasion, redox,  and material defects ( this provision shall only apply to the construction works specified in point b clause 1 Article 15 hereof).

c) Loss not quantifiable in money

Loss of data, software and computer programs applied to carry out construction survey and design according to the consultancy’s expert advice (this provision shall only apply to the professional liability insurance).

d) Loss dues to catastrophic events:

-Loss caused by wars, terrorism, nuclear reaction, nuclear radiation and radioactive contamination.

-Loss caused by construction survey and design consulting that leads to environment contamination and affects the third party ( this provision shall only apply to the professional liability insurance).

dd) Loss beyond the coverage of the insurance as stipulated in clause 9 Article 3 of the Law on Insurance Business.

2.The insurer shall negotiate with the contract holder and shall specify the Exclusion Clause in the insurance contract in accordance with clause 1 of this Article and other exclusion (if any) of liability for loss prescribed in clause 2 Article 6 of the Decree No.119/2015/ND-CP.

Article 6. Process of insurance contracts

The compulsory insurance for construction activities policy shall be concluded as follows:

1.Step 1: The contract holder shall provide sufficient necessary information for the insurer:

a) Fill in the proposal form made by using the following forms:

- As for the construction works insurance: the form in Appendix 1 attached hereto.

-As for professional liability insurance: the form in Appendix 2 attached hereto

-As for construction Labors’ compensation insurance: the form in Appendix 3 attached hereto

b) Provide the insurer with all documents required in the proposal form (if any) upon the insurer’s request.

2.Step 2.According to the proposal form and relevant documents (if any), the insurer shall examine and make risk assessment prior to make a decision on provision of the insurance.

3.Step 3. The insurer and the contract holder shall sign an insurance contract; the insurer shall issue the contract holder a Certificate of insurance. To be specific:

a) An insurance contract shall contain all information required in Article 13 of the Law on Insurance Business.

b) The Certificate of Insurance shall be made by using the form in Appendix 4 (for construction works insurance), Appendix 5 (for professional liability insurance) and Appendix 6 (for construction Labors’ compensation insurance) attached hereto.

Article 7. Termination of insurance contracts

1.An insurance contract shall be terminated in the following cases:

a) If the contract holder refuses to make full payment of the premium or refuse to pay the insurance premium within the payment period as agreed in the insurance contract while no agreement on delay in payment of premium is made as stipulated in clause 5 Article 15 ( for the construction works insurance), clause 5 Article 22 ( for professional liability insurance), clause 3 Article 34( for third-party civil liability insurance), the insurance contract shall be automatically terminated from the end of the payment period.

b)  The contract holder and insurer mutually agree to terminate the insurance contract in case the construction contract is temporarily halted or is terminated in accordance with regulations of laws.

In this case, the insurance contract will be terminated according to the time when the construction contract is temporarily suspended or is terminated under regulations of laws.

The contract holder shall notify the insurer within 05 days from the date of receipt of notification of suspension or termination of the construction contract.

c) Other cases prescribed by laws.

2.Legal consequences of termination of insurance policies

a) If an insurance contract is terminated under point a clause 1 of this Article, the contract holder shall make full payment of the premium of insurance to the time of termination of the insurance contract.

b) If an insurance contract is terminated under point b clause 1 of this Article, within 15 days from the date of termination, the insurer  shall, after deducting relevant reasonable expenses, refund the excessive amount of the premium (if any) to the contract holder in proportion to the remaining effective period of the insurance contract. Where the contract holder fails to make full payment of the premium (according to the insured period to the date of termination of the insurance contract), the contract holder shall make additional payment of the unpaid premium.

c) The legal consequences of termination of an insurance contract are specified in point c, clause 1 of this Article and shall apply in accordance with relevant regulations of laws.

Article 8. Rights and obligations of insurers

1.Rights of insurers:

a) Refuse to provide the compulsory insurance for construction activities for entities specified in clause 1, 2 and 3 Article 2 hereof if those entities fail to satisfy competence requirements for construction as stipulated in the Law on Construction and relevant regulations of laws.

b) Request contract holders to provide complete and reliable information related to conclusion and execution of the insurance contract.

c) Make risk assessment.

d) Collect premiums on due date via proper methods as agreed in the insurance contract; adjust the premiums in cases of variations in insured risks as stipulated in Article 20 of the Law on Insurance Business.

dd) Request the contract holder to apply  risk control and prevention measures as stipulated in regulations of laws; and to strictly comply with regulations of laws on occupational safety.

e) Request the third party to reimburse the insurer for the indemnity that the insurer has indemnified the insured in case the third party’s fault has given a rise to damage to the insured.

g) Exercise other rights in accordance with regulations of laws.

2.Obligations of insurers

a) Provide the compulsory insurance for construction activities as stipulated in the Decree No.119/2015/ND-CP, this Circular and other relevant regulations of laws.

b) Give explanation, information and documents related to conclusion and execution of the insurance contract.

c) Fully and punctually indemnify the insured as agreed in the insurance contract and relevant law provisions in case an insured event occurs.

d) Comply with the financial regimes stipulated in Article 35 hereof.

dd) Comply with the reporting regime stipulated in Article 36 hereof.

e) Cooperate with functional agencies in implementation of the compulsory insurance for construction activities.

g) Take on obligations prescribed hereof and other obligations under regulations of laws.

Article 9. Rights and obligations of contract holders

1.Rights of contract holders

a) Enter into the insurance contract with any insurer eligible to provide the compulsory insurance for construction activities as stipulated in Article 7 of the Decree No.119/2015/ND-CP.

b) Request the insurer to explain insuring clauses; to provide information and documents (if any) related to conclusion and execution of the insurance contract.

c) Request the insurer to indemnify the insured as agreed in the insurance contract in case an insured event occurs

d) Exercise other rights in accordance with regulations of laws.

2.Obligations of contract holders:

a) Buy the compulsory insurance for construction activities as stipulated in this Circular and other relevant regulations of laws.

b) Provide sufficient and necessary information for the insurer, accurately complete the proposal form and facilitate assessment of risks by the insurer.

c) Fully pay premiums on due date and by proper methods as agreed in the insurance contract.

d) Notify the insurer of cases that may give a rise to a claim during the validity period of the insurance contract.

dd) Apply risk control and prevention measures under regulations of laws; implement proper proposals of consultancies and the insurer.

e) Apply necessary safety measures; strictly comply with provisions of laws on occupational safety.

g) Authorize the insurer to request the third party to reimburse the indemnity which the insurer has indemnified for damage to the insured as a consequence of the third party’s fault.

h) Cooperate with functional agencies in implementation of the compulsory insurance for construction activities.

i) Take on obligations prescribed hereof and other obligations under regulations of laws.

Article 10. Dispute settlement

1.In case any dispute arises from or related to implementation of the insurance contract, the insurer and contract holder, in the first instance, shall amicably resolve through negotiation. If the dispute is not resolved on the basis of negotiation, it shall be referred to the arbitration by any party (if it is prescribed in the insurance contract) or shall be brought to the court under Vietnam’s regulation of Law.

2.The statute of limitation for filing a lawsuit in connection with the insurance contract is 03 years from the date on which the dispute arises.

Chapter II

SPECIFIC PROVISIONS

Section 1. CONSTRUCTION WORKS INSURANCE

Article 11. The insured entity and minimum assured sum

1.The insured of the construction works insurance is any works and work item specified in clause 1 Article 4 of the Decree No.119/2015/ND-CP.

2.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 assured sum  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).

Article 12. Coverage

The insurer shall indemnify for loss and damage to the construction works in the construction period caused by all risks other than those prescribed in Article 5 hereof.

Article 13. Insurance period

The validity period of the construction works insurance shall be conformable to clause 1 Article 5 of the Decree No.119/2015/ND-CP. To be specific:

1.As for the construction works specified in point a clause 1 Article 15 hereof: The insurance  period specified in the insurance contract shall be calculated from the commence date to the date of completion of the construction works as stipulated in the investment decision-making authority’s document, including  amendments and  supplement  thereto (if any) . The insurance period of components and work items which are handed over or placed into service shall end from the date such components and work items are handed over or come into operation.

2.As for the construction works specified in point b clause 1 Article 15 hereof: The insurance period specified in the insurance contract is calculated from the date of construction commencement stipulated in the investment decision-making authority’s documents (including adjustments and supplement thereto, if any) to the date of handover or after completion of the first commissioning, but shall not exceed 28 days from the date of commissioning. The insurance period of a used installation thereof shall end from the time it undergoes the commissioning.

Article 14. Liability to buy insurance

The investor shall buy the insurance for the whole project or for each work item in the construction period. To be specific:

1.The investor shall purchase the insurance for the whole project at a premium equal to the minimum assured sum  stipulated in clause 2 Article 11 hereof.

2.For the insurance for each work item in the construction period, the investor shall pay a premium which is equal to the sum assured of that work item but not less than the total value of the completed work item; and the total sum assured of work items shall be not less than the total minimum assured sum  as stipulated in clause 1 Article 11 hereof.

Article 15. Premiums and premium payment

1. The premium of construction works in the construction period is determined in Appendix 7 attached hereto. To be specific:

a) If the insured construction works valued at less than VND 700 billion, whether including the cost of installation of less than 50 % of the total value of insured work items or not, the premiums shall be determined in accordance with point 1 clause I Appendix 7 attached hereto.

b) If the insured construction works valued at less than VND 700 billion, including the cost of installation of at least 50 % of the total value of insured work items, the premiums shall be determined in accordance with point 1 clause II Appendix 7 attached hereto.

c) For any construction works beyond point 1 clause I and point 1 clause II Appendix 7 attached hereto or construction works valued at VND 700 billion or more, the insurer and contract holder shall reach an agreement on insuring clauses, principle, premiums and deductible on the basis of proofs certifying that the ceding company receives insurance ceded under the same insuring  clauses, principle, premiums and deductible as those applying to the insurer and contract holder Foreign ceding companies and organizations shall be those ranked at least BBB by the Standard & Poor’s or B++ by A.M.Best or the equivalent rank in the immediately preceding year of the ceding year by qualified and experienced rating organizations

2.On the basis of level of risks of the insured item, the insurer is entitled to adjust the premium increased by up to 25% of the premium determined in item a point 1 clause I Appendix 7 attached hereto (for construction works specified in point a clause 1 of this Article) or determined in item a Point 1 clause II Appendix 7 attached hereto (for any construction works specified in point b clause 1 of this Article).

3.In the event that the construction period lasts longer than that prescribed in the decision-making authority s document, the insurer and contract holder may negotiate the additional premiums for the extension. The additional premium ( if any) shall be calculated on the basis of the premium prescribed in Appendix 7 attached hereto, the proportion of the extended time to the total construction duration stipulated in the investment decision-making authority’s document and other risks.

4.Deadline for payment of premiums of construction works insurance shall be specified in the insurance contract. To be specific:

a) In case of lump-sum payment: A (provisional) premium shall be paid within 30 days from the effective date of the insurance contract and no later than 30 days from the commencement date of the insurance period. For the insurance period of less than 30 days, the maturity date shall not be later than the insurance period. The total (provisional) premium shall be determined on the basis of the estimated compulsory insurance price in the project’s cost estimate approved by the competent authority, including adjusted and supplemented costs ( if any). Settlement of premiums shall be made in accordance with clause 6 of this Article.

b) In case of installment payment:

According to the construction project’s cost estimate approved by the competent authority, the contract holder and insurer shall reach an agreement on installation as follows:

-1^stinstallment: At least 10% of the total (provisional) premium for insured work items shall be settled . The total (provisional) premium shall be determined based on the estimated compulsory insurance price in the project’s cost estimate approved by the competent authority. The premium shall be paid within 30 days from the effective date of the insurance contract and no later than 30 days from the commencement date of the insurance period.

-The following installments: The amount  and schedule of each installment shall be mutually agreed by the insurer and contract holder and the payment schedule shall not be slip behind that prescribed in the construction contract (for work items required to  be insured by compulsory insurance) as stipulated in regulations of laws.

-Final installment: Final installment must be made at least 15 days before the expiry date of the insurance period.

-Settlement of premiums shall be made in accordance with clause 6 of this Article.

5.Subject to the insurer’s consent, the contract holder could delay making payment of the premium. This delay must be subject to the condition that the policy has collateral properties or payment guarantees as stipulated in the regulations of laws.

6.Settlement of premiums shall be made on the basis of the final value of the construction works (for insured items under the compulsory insurance). To be specific:

a) In case the final value of the construction contract (work items required compulsory insurance) is higher than the approved estimate as the insurance contract is concluded, premium shall be adjusted increased accordingly. The contract holder shall make payment of the additional premium to the insurer within 30 days from the date on which the final construction contract value is approved in writing by the competent authority.

b) In case the final value of a construction contract (work items required compulsory insurance) is lower than the approved contract value, the premium shall be adjusted decreased accordingly. The insurer shall refund the excessive amount of payment to the contract holder within 30 days from the date of receipt of the competent authority’s written approval for the final value of the construction contract from the contract holder. The contract holder shall receive this refund given by the insurer. If construction contractor is also the contract holder and the premium is included in the contract value, the construction contractor must transfer such refund to the project owner.

Article 16. Loss assessment

1.Loss shall be assessed in accordance with Article 48 of the Law on Insurance Business. The assessing agencies shall be responsible for their assessment results.

2.It shall ensure that loss assessment is carried out objectively, accurately, reliably and punctually.

3.The results of loss assessment shall be specified in the assessment record.

Article 17. Indemnity principles

1.Where an insured event occurs, the contract holder and insurer shall cooperate in indemnification as follows:

a)  the contract holder shall:

-Immediately notify the insurer of the insured event via proper means of communication, after 14 days from the date of occurrence, the contract holder shall notify the insurer in writing using form in Appendix 10 attached hereto.

-After notifying to the insurer, the contract holder may repair or replace damaged components whose value does not exceed the respective deductible prescribed in item c, point 1, clause I, Appendix 7 attached hereto (for construction works specified in point a clause 1 Article 15 hereof) or item c point 1 clause II Appendix 7 attached hereto (for construction works specified in point b clause 1 Article 15 hereof).

In other circumstances, the insurer shall carry out loss assessment prior to repair or replacement. If the loss assessment is not conducted within 05 days from the date of receipt of notification, the insured has the right to exercise remedy or replacement. The insurer shall cover expenses for remedy or replacement of damaged work items within the coverage with the proviso that the contract holder punctually carries out remedy and replacement.

-Preserve the status quo of damaged components and make them available for loss assessment by the insurer’s representative and assessor.

-Promptly notify the police authority in case of theft or burglary.

-Apply mitigating measures , within the competence, to minimize loss.

-Provide the insurer with documents required in the claim application  as stipulated in clause 1, 2, 3, 4 and 6 Article 18 hereof and facilitate verification of such documents by the insurer.

-Implement, co-ordinate or permit the insurer to take all actions and measures which may be necessary or required by the insurer to protect the insurer’s interests after indemnifying for  loss or damages as stipulated herein.

b) As to insurers:

-Carry out loss assessment as stipulated in Article 16 hereof.

-Provide instructions and cooperate with the contract holder and relevant entities in collection of complete documents for preparation of the claim application.

-Formulate claim documents as prescribed in clause 5 Article 18 hereof.

-In case the loss the claim application is accepted, the insurer shall notify the contract holder of claim settlement in writing.

-In case of rejection, the insurer shall specify reasons for rejection in writing.

2.The Insurer shall indemnify only to the extent the property damage to the insured and to the extent of sum assured.

3.The indemnity for each item specified in the insurance contract shall not exceed its sum assured. The total indemnity shall not exceed the total sum insured specified in the insurance contract. To be specific:

a) In case of repairable damage, all damage shall be repaired. The indemnity is equal to the necessary cost of repairs to restore the damaged items to their original condition immediately before the occurrence of the damage less salvage (in case the contract holder revokes the damaged items) and the deductible.

b) In case of total loss, the indemnity is the actual market value of the items immediately before the occurrence of the loss and at the place of occurrence less the deductible. In case the contract holder revokes the damaged items, the indemnity is the actual value of those items immediately before the occurrence of the loss less salvage and the deductible.

4.The cost of (provisional) repairs shall be borne by the insurer if such repairs constitute part of the final repairs and do not increase the total repair expenses as prescribed in the final repair plan.

5.The insurer shall not be liable for any expense for alteration, addition and/or improvement of any insured work item.

6.If the contract holder enters into construction works insurance  policies with 02 insurers or more covering the same item under the same condition and in the same insured event then each insurer shall only be liable to pay or contribute their ratable proportion of their agreed sum assured to the total sum insured of all the insurance policies. The total indemnity paid by all the insurers shall not exceed the actual losses

7.The insurer shall not be liable for any expense which arises, increases from the act of fraud as stipulated in the Criminal Law.

Article 18. Claim applications

The insurer shall cooperate with the contract holder, the insured and relevant agencies in collection of relevant documents for formulating the claim application. A claim application includes the following documents:

1.A notice of occurrence and claim request form made by using the Appendix 10 attached hereto.

2.Documents related to the insured items, including the insurance contract and Certificate of Insurance.

3.Proofs of property loss or damage, including:

a) Construction incident documentation (certified true copies or copies confirmed by the party forming such documentation) as stipulated in Article 50 of the Government’s Decree No.46/2015/ND-CP dated May 12, 2015 on construction quality control and maintenance and its amendments, supplement and replacements thereto (if any).

b) Valid invoices and documentation in case of repair or replacement.

4.Written proofs of  necessary and reasonable expenses incurred by the contract holder to minimize the extent of loss or damage or by following the insurer’s instructions.

5.A record of assessment of the causes and extent of loss or damage prepared by the insurer or the insurer’s authorized person.

6.Other relevant documents (if any).

SECTION 2. PROFESSIONAL LIABILITY INSURANCE

Article 19. The insured and minimum assured sum

1.Consultancies are obliged to buy compulsory professional liability insurance in connection to the construction surveying and design of construction works ranked grade II or higher for the third party.

2.The minimum sum insured must be equal to the value of the consulting contract for construction surveying and/or consulting contract for construction design.

Article 20. Coverage

The insurer shall reimburse the consultancy for indemnities which the contractors shall legally indemnify the third party for  their loss and all related costs  incurred from construction consultancy services, except loss stipulated in Article 5 hereof.

Article 21. Insurance period

The professional liability insurance comes into effect from the commencement date of provision of consultancy services till the end of the construction warranty period as stipulated in regulations of laws.

Article 22. Premiums and payment of premiums

1.The premiums of professional liability insurance are prescribed in   Appendix 8 attached hereto. To be specific:

a) In respect of construction works which is valued at less than VND 1,000 billion and is different from dams, docks, ports, piers, harbors, breakwaters and water irrigation construction works; construction works of airport, building of airplane, satellite, aerospace; ships or repair works; both onshore and offshore energy construction works; railway, tram, express train and underground projects, mining projects, the premiums and deductible are determined in Clause 1 Appendix 8 attached hereto.

b) In respect of the construction works other than those specified in point a clause 1 of this Article:  the insurer and contract holder shall reach an agreement on insuring clauses, principle, premiums and deductible on the basis of proofs certifying that the ceding company receives insurance ceded under the same insuring clauses, principle, premiums and deductible as those the insurer applies to contract holder. Foreign ceding companies and organizations shall be those ranked at least BBB by the Standard & Poor’s or B++ by A.M.Best or the equivalent rank in the immediately preceding year of the ceding year by qualified and experienced rating organizations.

2.According to the level of risks of the insured, the insurer  shall be entitled to adjust the premium increased by up to 25% of the premium calculated as stipulated in point a clause 1 Appendix 8 attached hereto.

3.In the event that the construction period lasts longer than that prescribed in the investment decision-making authority s document, the insurer and contract holder may negotiate for the additional premium for the extended time. The additional premium shall be calculated on the basis of the premium stipulated in point a clause 1 Appendix 8 attached hereto and in proportion to the extended time.

4.Settlement of (provisional) premium of the professional liability insurance shall be mutually agreed by the insurer and the contract holder and shall be specified in the insurance contract. To be specific:

a) In case of lump-sum payment: A (provisional) premium shall be paid within 30 days from the effective date of the insurance contract and no later than 30 days from the commencement date of the insurance period. For the insurance period of less than 30 days, the deadline for payment of premium shall not exceed the insurance period. The total (provisional) premium shall be determined on the basis of the approved estimated value of the consulting contract including adjusted and additional costs (if any). Settlement of premiums shall be made in accordance with clause 6 of this Article.

b) In case of installment:

According to the estimated value of the consulting contract for construction survey and design approved by the competent authority as at the time of conclusion of the insurance contract, the contract holder and insurer shall agree on installment as follows:

-The first installment: 50% of the total (provisional) premium shall be paid within  30 days from the effective date of the insurance contract and no later than 30 days from the commencement date of the insurance period. The following installments shall be made as agreed by the insurer and contract holder in the insurance contract originally concluded. In every circumstance, the maturity date must not be later than the expiry date of insurance contract

-Settlement of premiums shall be made in accordance with clause 6 of this Article.

5.Subject to the insurer’s consent, the contract holder could delay making payment of the premium. This delay shall be prescribed in the insurance contract and must be subject to the condition that the contract holder has collateral properties or payment guarantees as stipulated in the regulations of laws.

6.Settlement of premiums shall be made based on the final value of the consulting contract for construction survey and design as follows:

a) In case the final value of a consulting contract is adjusted increased compared with the estimated value approved by the competent authority at the time of conclusion of the insurance contract, the premium shall be adjusted increased accordingly. The contract holder shall pay an additional premium as adjusted to the insurer within 30 days from the date of receipt of the competent authority’s written approval for the final value.

b) In case the final value of a consulting contract for construction survey and design is lower than the estimated value approved by the competent authority at the time of conclusion of the insurance contract, the premium shall be adjusted decreased accordingly. The insurer shall refund the excessive amount of payment to the contract holder within 30 days from the date of receipt of the competent authority’s written approval for the final value from the contract holder.

Article 23. Obligations to buy insurance

The contract holder is obliged to buy the compulsory professional liability insurance prior to provision of consultancy services.

Article 24. Principles of indemnity

1.The insurer shall reimburse the consultancy for indemnities which the consultancy is liable to indemnify the third party for their loss and all related costs incurred as prescribed in regulations of laws. To be specific:

a) Loss or damage to the Third Party and related expenses incurred due to the negligence of the insured in process of rendering the construction survey, construction design within the coverage.

b) Third party’s first claim made against the insured (as a consequence of an insured event) and notified to the insurer during the insurance period by the contract holder, including the expenses  for the lawyers delegated by the insurer or the insured (having the insurer’s written consent ), other fees and expenses incurred from the investigations, revisions and defense related to the insured event but not including  salaries paid for the Labors or managers who sign the employment contract with the insured.

c)  Other incurred expenses under regulations of laws.

2.The aggregate limit of indemnity of the insurer in respect of all accumulated claims arising within a period of insurance shall not exceed the sum assured prescribed in the insurance contract.

3.If the contract holder enters into professional liability insurance  policies with 02 or more insurers covering the same subject under the same condition and insured event, then each insurer shall only be liable to indemnify or contribute their ratable proportion of their agreed sum assured to the total sum insured of all the insurance policies .

4.The insurer shall not be liable for any expense which the consultancy reimburses the third part without the insurer’s prior written consent.

5.The insurer shall not be liable to indemnify in case any claim request is filed without the insured’s consent.

6.The insurer shall not be liable for any expense which arises or incurs from the act of fraud as stipulated in the Criminal Law.

7.In case of loss or damage to the third party’s property, the loss assessment shall be carried out in accordance with Article 16 hereof.

8.Upon the third party’s claim request, the contract holder and the insurer shall cooperate in settlement of such claims as follows:

a) As to the contract holder:

-Immediately notify the insurer of the insured event via proper means of communication; after 14 days from the date of receipt of the third party’s claim request, the contract holder shall inform the insurer in writing using form in Appendix 10 attached hereto.

-Take all steps within the capacity to minimize the extent of loss or damage.

-Submit  requested documents as specified in Clause 1, Clause 2, Clause 3, Clause 4, Clause 5, Clause 7 Article 25 of this Circular, and facilitate verification of those documents by the insurer.

-Implement, co-ordinate or permit the insurer to take  actions and measures which are necessary or are required by the insurer to protect the insurer’s interests after indemnification against loss or damage within the liability prescribed herein.

b) As to insurers:

-Carry out loss assessment as stipulated in Article 16 hereof.

-Provide instructions and cooperate with the contract holder and relevant entities in collection of complete documents for preparation of the claim application.

-Formulate  claim documents as prescribed in clause 6 Article 25 hereof.

-Cooperate with the contract holder in settlement of the third party’s claim request  under the coverage of the insurance contract when an insured event occurs.

-In case the loss or damage is under the coverage, the insurer shall make a notice of indemnification in writing.

-In case of rejection, the insurer shall specify reasons for rejection in writing.

Article 25. Claim applications

The insurer shall cooperate with the contract holder, the insured and relevant agencies in collection of relevant documents for formulating the claim application. The claim application for professional liability insurance includes:

1.A notice of the third party’s claim and claim request form made by the contract holder using the Appendix 10 attached hereto.

2.Documents related to the insured, including the insurance contract and Certificate of Insurance.

3.The third party’s written claim against the insured.

4.Proofs of bodily injuries (copies certified by the medical facility; or by the insurer or the insurer’s representative after collating with the original copies). Depending on the extent of injuries, there may include one or certain following documents:

a) Injury Certificate.

b) Hospital discharge form.

c) Documents certifying surgical interventions.

d) medical records

dd) Death certificate (in case of death).

e)  Valid medical expense invoices and receipts (original copies)

5. Proofs of loss or damage to property, including:

a) Construction incident documentation (certified true copies or copies certified by the party forming such documentation) as stipulated in Article 50 of the Government’s Decree No.46/2015/ND-CP dated May 12, 2015 on construction quality control and maintenance and its amendments, supplement and replacements (if any).

b) Valid invoices and documentations in case of repair or replacement.

c) Written proofs of necessary and reasonable expenses which are incurred by the contract holder to minimize the extent of loss or damage or are incurred under the insurer’s instructions.

6.A record of assessment of causes and extent of injuries prepared by the insurer or insurer’s authorized person.

7.Other relevant documents (if any).

Section 3. CONSTRUCTION LABORS’ COMPENSATION INSURANCE

Article 26. The insured entity and minimum assured sum

1.The construction contractors is legally obligated to purchase the construction Labors’ compensation insurance for their Labors who are assigned to work on construction sites as stipulated in regulations of laws.

2.The minimum assured sum  for construction  Labors’ compensation insurance shall be VND 100,000,000/person/ occurrence.

Article 27. Coverage

The insurer has the liability to reimburse the construction contractor for  indemnities given to construction Labors for disablement or death caused by occupational accidents  and occupational diseases on the construction site, other than those specified in the exclusion clause stipulated in Article 5 of this Circular

Article 28. Period of insurance

1.The period of insurance shall commence from  the date  an insured Labor starts working on construction site until the end of the construction works warranty period as stipulated by Law.

2.The exact period of insurance  during which a construction Labor is covered is  determined based on employment contract and documents on the actual working time of the construction Labor on the construction site certified by the construction contractor.

Article 29. Premiums and payment of premiums

1.The premiums of Labors’ compensation insurance are defined by Appendix 9 attached hereto.

2.According to the level of risks of the insured, the insurer shall be entitled to adjust the premium increased by up to 25% of the premium calculated in accordance with Appendix 9 attached hereto.

3.Premium payment clauses shall be mutually agreed by the contract holder and the insurer and must be stated in the insurance contract.  To be specific:

a) In case of lump-sum payment: The premium shall be paid within 30 days from the effective date of the insurance contract and no later than 30 days from the commencement date of the insurance period. For the insurance period of less than 30 days, the deadline of payment shall not exceed the insurance period.

b) In case of installment: The insurer and contract holder shall reach an agreement on installation of premiums in writing as follows:

-The first installment: 50% of the total (provisional) premium shall be paid within  30 days from the effective date of the insurance contract and no later than 30 days from the commencement date of the insurance period. The following installments shall be made as agreed by the insurer and contract holder in the originally-concluded insurance contract.

-In every circumstance, the maturity date must not be later than the expiry date of insurance contract

4.In case of variation in the number of insured Labors and changes in Labor’s tasks, the following procedure shall apply:

a) Before the 15^thof the month immediately following the month of variation and changes, the construction contractor shall send the insurer a written notice of such changes or variation enclosed with a list of the additional or downsized Labors (in case of variation of the number of Labors), or a job description undertaken by Labors (in case of changes in jobs/tasks).

b) In case that the number of Labors increases and change in jobs causes aggravation of covered risks, the construction contractor must pay an additional premium before the 15^thof the month immediately succeeding the month of notice.

In case that the number of Labors increases and change in jobs alleviates the severity of covered risks, the insurer shall refund an amount of the premium adjusted decreased in proportion to the remaining period of insurance before the 15^thof the month immediately succeeding the month of notice.

d) If the construction contractor duly takes on obligations specified in point a and c of this Clause, the insurance contract shall automatically validate or shall be terminated upon the increase or downsizing of Labors according to the list of additional or downsized Labors; the insurance contract shall automatically validate in case of changes in Labor’s jobs/tasks from the date on which it occurs as reported in writing by the insurer.

5.Subject to the insurer’s consent, the contract holder could delay making payment of the premium. This delay in payment of premiums shall be prescribed in the insurance contract and must be subject to the condition that the contract holder has collateral properties or payment guarantees as stipulated in the regulations of laws.

Article 30. Liability to buy insurance

Every contract holder shall be obliged to purchase the compulsory Labors’ compensation insurance for construction Labors on construction sites.

Article 31. Principles of indemnity

1.When an occupational accident or disease occurs to any construction Labor on a construction site, both contract holder and the insurer shall jointly take on liability to indemnify as follows:

a) As to the contract holder:

-Immediately notify the insurer of the insured event via proper means of communication, then in writing made by using Appendix 11 attached hereto within 14 days from the date of occurrence.

-Take all steps within the capacity to minimize the extent of loss or damage.

-Provide the insurer with documents required in the claim application as stipulated Article 32 hereof and facilitate verification of such documents by the insurer.

-Implement, co-ordinate or permit the insurer to take  actions and measures which are necessary or are required by the insurer to protect the insurer’s interests after indemnification against Loss or damage within the liability prescribed herein.

b) As to insurers:

-Provide instructions and cooperate with the contract holder and relevant entities in collection of complete documents for preparation of the claim application; determine causes and severity of injuries.

-In case the claim is accepted, the insurer shall make a notice of indemnification in writing.

-In case of rejection, the insurer shall specify reasons for rejection in writing.

2.If a Labor’s injury or death as a consequence of any occupational disease or accident occurring during the construction on the construction site is within the coverage, the insurer must cover expenses as agreed by the construction contractor   and the insured Labor or insured Labor’s legal representative (in case of dead). Such covered expenses shall be specified as follows:

a) Allowance during the period of treatment prescribed by doctors which is calculated based on the patient’s salary stated in the employment agreement but shall not exceed the salary of six months per occurrence.

c) Actual expenses including reasonable and necessary expenses for emergency services and outpatient and inpatient treatment but not exceeding 100 million dong/person/AOA.

c) If an insured Labor loses less than 81% of his/her work capacity, the indemnity by severity of bodily injury shall be determined according to the Schedule of Indemnities in Appendix 12 attached hereto.

d) If an insured Labor dies or permanently loses 81% of his/her work capacity or more, the insurer shall pay an indemnity of 100 million dong/person/AOA.

The total indemnity as stipulated in point a, b, c and d of this clause shall not exceed 100 million dong/person/AOA.

3.In case that the insured Labor’s injury caused by any occupational accident and disease becomes exacerbated due to pre-existing injury and illness, the insurer shall not be liable for the exacerbation of injury.

4.Regarding indemnification under point b clause 2 of this Article, If the contract holder enters into Labors’ compensation insurance policies with 02 or more insurers covering the same subject under the same condition and insured event, then each insurer shall only be liable to indemnify or contribute their ratable proportion of their agreed sum assured to the total sum insured of all the insurance policies.

Article 32. Claim applications

The insurer shall cooperate with the contract holder, the insured and relevant agencies in collection of relevant documents for formulating the claim application. Documents requested in a claim application:

1.A notice of occupational diseases/ accidents and claim request form made by the insurer using the Appendix 11 attached hereto.

2.Documents related to the insured, including:

a)  The insurance contract, Certificate of insurance (if any), employment contract signed by the insured and Labor suffering from occupational diseases and/or accidents.

b) The Labor’s written claims for occupational diseases and accidents (if any).

3.Proofs of bodily injuries or death due to occupational accidents (copies certified by the competent authorities or by the insurer or the insurer’s representative after collating with the original copies).

a) An occupational accident investigation report (if any) prepared by the competent authority. Where a traffic accident is determined as an occupational accident, traffic accident report or scene investigation report and the diagram of the traffic accident scene prepared by the competent authority shall be submitted.

b) Depending on the severity of bodily injury, one or certain following documents may be included: Injury certificate, hospital discharge certificate, surgery record, medical documents, death certificate and certificate of inheritance (in case of dead).

c) A work capacity certificate issued by Board of Medical Examiner (in the event of loss of 5% of work capacity or more).

d) Original copies of valid invoices and documents certifying treatment of injuries caused by the occupational accident issued by the medical facility.

4.Proofs of injuries or death due to occupational diseases:

a) An environmental hazard measurement record issued by competent authorities. If this record is made for 2 people or more, each of them must keep one copy.

b) A hospital discharge certificate (or occupational disease examination records if the Labor does not receive treatment in any hospital), surgical record, medical record, death certificate and certificate of inheritance (in case of dead).

c) A work capacity certificate issued by Board of Medical Examiner ( in the event that the insurer makes indemnification in accordance with the Schedule of indemnities stipulated in Appendix 12 attached hereto).

d) Valid invoices and documents certifying treatment of injuries caused by the occupational accident issued by the medical facility.

5.Proofs of reimbursement by the construction contractor for injuries and dead caused by occupational diseases and accidents within the coverage (if any).

6.Other relevant documents (if any).

Section 4.THIRD-PARTY CIVIL LIABILITY INSURANCE

Article 33. The insured entity and coverage

1.The contractor shall be obliged to purchase the third-party civil liability insurance for the third party when the project is executed.

2.Insurers shall be liable to reimburse the contractors if the contractors are requested to indemnify for loss or damage to third party incurred within the coverage due to the contractor’ faults within the period of insurance.

Article 34. Insurance implementation

The third-party civil liability insurance shall be applied to the third party in accordance with relevant regulation of laws and the following instructions:

1.Insurers shall actively establish insuring clauses, principle and schedules of premiums of the third-party civil liability  insurance in accordance with point b clause 4 Article 39 of the Government’s Decree No.73/2016/ND-CP dated July 01, 2016 detailing the Law on Insurance Business, Law on amendments and supplement to a number of Articles of the Law on Insurance Business and amendments and supplement thereto (if any).

2.Settlement of premiums of the third-party civil liability insurance shall be conducted as follows:

a) In case of lump-sum payment: The premium shall be paid within 30 days from the commencement date of the insurance period. For the insurance period of less than 30 days, the maturity date shall not be later than the insurance period.

b) In case of installment: The insurer and contract holder shall reach an agreement on installation of premiums which is made in writing as follows:

-The first installment: 50% of the total (provisional) premium shall be paid within  30 days from the effective date of the insurance contract and no later than 30 days from the commencement date of the insurance period. The following installments shall be made as agreed by the insurer and contract holder in the originally-concluded insurance contract.

-In every circumstance, the deadline for payment of premium must not exceed the insurance period prescribed in the insurance contract

3.Subject to the insurer’s consent, the contract holder could delay making payment of the premium. This delay in payment of premiums shall be prescribed in the insurance contract and must be subject to the condition that the contract holder has collateral properties or payment guarantees as stipulated in the regulations of laws.

Secion5. FINANCIAL REGIME AND REPORTING REGIME

Article 25. Financial regime

Insurers providing compulsory insurance for construction activities shall:

1.Comply with the financial regime stipulated in the law on insurance business and relevant regulations of laws.

2.Enter premium revenues, insurance commissions, indemnities and other expenses related the compulsory insurance for construction activities into separate accounts.

Article 36. Reporting regime

The insurer shall prepare and submit the reports on compulsory insurance for construction activities as follows:

1.As for periodic reports: Every insurer shall prepare and submit quarterly and annual reports (both electronic and physical copies) by using the form in Appendix 13, 14 and 15 attached hereto. To be specific:

a) Quarterly reports shall be submitted within 30 days from the end of the reported quarter.

b) Annual reports shall the submitted within 90 days from the end of the reported year.

2.Surprised reports shall be submitted upon request of the Minister of Finance.

Chapter III

IMPLEMENTATION PROVISIONS

Article 37. Transitional provisions

Construction insurance policies signed before the effective date of this Circular shall be continued to be executed in accordance with the applicable laws at the time of signature.

Article 38. Effect

1.This Circular takes effect on March 01, 2017.

2.Any problems arising in the course of  implementation of this Circular should be promptly reported to the Ministry of Finance. /.

For the Minister

The Deputy Minister

Tran Xuan Ha

* All Appendices are not translated herein