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| New regulations on compulsory fire and explosion insurance from September 6, 2023. (Source: TVPL) |
In Decree 67/2023/ND-CP, there are many regulations related to compulsory fire and explosion insurance, such as:
Compulsory fire insurance coverage
Insurance companies are responsible for indemnifying for damages to insured objects arising from fire and explosion risks, except for cases of insurance liability exclusion as prescribed.
Cases of exclusion from compulsory fire and explosion insurance liability
- Cases of insurance liability exclusion for facilities with fire and explosion hazards according to the provisions of the law on fire prevention and fighting (except nuclear facilities): Insurance companies are not responsible for insurance compensation in the following cases:
+ Earthquakes, volcanic eruptions or other natural disturbances.
+ Damage caused by political, security and social order and safety incidents.
+ Property burned or exploded according to the decision of a competent state agency.
+ Self-fermenting or self-heating assets; assets subject to a heat-using treatment process.
+ Lightning strikes directly on insured property but does not cause fire or explosion.
+ Nuclear weapons materials cause fire and explosion.
+ Machinery, electrical equipment or parts of electrical equipment are damaged due to direct impact of overload, overpressure, short circuit, self-heating, electric arc, electric leakage due to any cause, including lightning.
+ Damage caused by intentional fire or explosion by the insured; intentionally violating fire prevention and fighting regulations and being the direct cause of the fire or explosion.
+ Damage to data, software and computer programs.
+ Damage caused by burning forests, bushes, grasslands, or burning for the purpose of clearing fields and land.
- Cases of insurance liability exclusions for nuclear facilities: The insurance company and the insurance buyer agree on cases of insurance liability exclusions based on the approval of the reinsurance company.
Compulsory fire insurance premiums and deductibles
(1) For facilities with fire and explosion hazards (except nuclear facilities) with a total insured amount of assets at a location of less than VND 1,000 billion: Insurance premiums and insurance deductibles are specified in Clause 1, Section I, Appendix II and Clause 1, Section II, Appendix II issued with Decree 67/2023/ND-CP.
Based on the risk level of the insured object, the insurance company is allowed to increase or decrease the insurance premium by a maximum of 25% of the insurance premium.
In case in the previous fiscal year, the insured object is the direct cause leading to the amount of original insurance compensation being greater than the original insurance premium revenue of compulsory fire and explosion insurance, based on data confirmed by the insurance company's actuary and confirmed by an independent auditing organization, when renewing the insurance contract, the insurance company and the insurance buyer can agree on the insurance premium and insurance deductible to ensure the solvency of the insurance company.
(2) For facilities with fire and explosion hazards with a total insurance amount of assets at one location of VND 1,000 billion or more (except nuclear facilities):
Insurance companies and insurance buyers may agree on insurance premiums and insurance deductibles based on evidence proving that the leading foreign insurance company or organization accepting reinsurance has confirmed. The leading foreign insurance company or organization accepting reinsurance and the foreign insurance company or organization accepting reinsurance from 10% of the total liability of each reinsurance contract must comply with the provisions of Clause 9, Article 4 of Decree 67/2023/ND-CP. In all cases, the insurance premium must not be lower than the insurance premium corresponding to VND 1,000 billion multiplied (x) 75% of the insurance premium rate specified in Clause 1, Section I, Appendix II issued together with Decree 67/2023/ND-CP.
(3) For core facilities: The insurance enterprise and the insurance buyer may agree on the rules, terms, premiums and insurance deductibles based on evidence proving that the foreign insurance enterprise or organization leading the reinsurance confirms that it accepts reinsurance in accordance with the rules, terms, premiums and insurance deductibles that the insurance enterprise or organization provides to the insurance buyer. The foreign insurance enterprise or organization leading the reinsurance and the foreign insurance enterprise or organization accepting reinsurance from 10% of the total liability of each reinsurance contract must comply with the provisions of Clause 9, Article 4 of Decree 67/2023/ND-CP.
Principles of compulsory fire and explosion insurance compensation
Insurance companies shall consider and settle insurance claims in accordance with the law on insurance business and the following principles:
- When a loss occurs, the insured must immediately notify the insurance company by means of communication, then within 14 days from the date of loss to the facility with fire or explosion hazards, must notify the insurance company in writing.
- The amount of insurance compensation for damaged property shall not exceed the insurance amount of that property (agreed upon and stated in the insurance contract, Insurance Certificate) minus the insurance deduction specified in Clause 3, Article 28 of Decree 67/2023/ND-CP.
- Maximum deduction of 20% of insurance compensation amount in case the facility with fire and explosion hazards does not fully and timely implement the recommendations in the Fire Prevention and Fighting Safety Inspection Record of the competent police agency, leading to increased damage when a fire or explosion occurs.
Compulsory fire insurance claim file
Compulsory fire and explosion insurance claim file includes the following documents:
- Claim document of the insured.
- Documents related to the insured object, including: Insurance contract, Insurance certificate.
- Minutes of fire safety inspection by the competent police agency at the time closest to the time of the insurance event (copy).
- Minutes of assessment by the insurance company or person authorized by the insurance company.
- Document of conclusion or notice on the cause of fire or explosion from competent authority (copy) or evidence proving the cause of fire or explosion.
- Damage declaration and documents proving the damage.
The insurance buyer is responsible for collecting and sending to the insurance company the documents specified in Clause 1, Clause 2, Clause 3, Clause 5 and Clause 6, Article 29 of Decree 67/2023/ND-CP. The insurance company is responsible for collecting the documents specified in Clause 4, Article 29 of Decree 67/2023/ND-CP.
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