Decree No. 119/2015/ND-CP on mandatory insurance in investment and construction activities

DECREE

Provisions on mandatory insurance in investment construction activities

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Pursuant to the Law on Organization of the Government dated December 25, 2001;

Based on the Insurance Business Law dated December 9, 2000;amendm 2000;

Pursuant to the Law Amending and Supplementing Article 6 and Appendix 4 on the List of Industries and Trades Subject to Investment and Business Conditions dated January 22,, amended and supplemented by Decree No. 109/2025/NĐ-CP and Decree No. 193/2025/NĐ-CPprovisions of Circular No. 24/2015/TT-BTTTT dated August 18, 2015 of the Minister of Information and Communications INDUSTRIAL EXPLOSIVES - TNP1 EXPLOSIVESand the amended Insurance Business Law dated November 24, year 20242010;

Pursuant to the Law on Construction promulgated on June 18, 2014;

At the proposal of the Minister of Finance,

The Government issues this Decree to stipulate mandatory insurance in investment construction activities.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree stipulates on: Obligations to participate in mandatory insurance, conditions for implementing mandatory insurance, minimum insurance amount, principles for determining insurance premium rates, and state management of mandatory insurance in investment construction activities.

Article 2. Applicability

This Decree applies to:

1. Investors, contractors (in cases where construction project insurance premiums have been included in the contract price).

2. Consulting contractors.

3. Construction contractors.

4. Non-life insurance companies, branches of foreign non-life insurance companies (hereinafter referred to as "insurance companies"), reinsurance companies.

5. Other agencies, organizations, and individuals related to mandatory insurance in investment construction activities.

Article 3. Principles for participating in mandatory insurance in investment construction activities

1. Insurance companies, reinsurance companies, reinsured companies, and foreign organizations accepting reinsurance must meet the conditions for implementing mandatory insurance in investment construction activities as prescribed in Section 2 Chapter II of this Decree.

2. Insurance companies provide mandatory insurance in investment construction activities when the insured party meets all the construction capacity requirements stipulated in the Construction Law and relevant laws.

3. Investors, consulting contractors, construction contractors (hereinafter referred to as "insured parties") and insurance companies implement mandatory insurance in investment construction activities according to their responsibilities, insurance premium rates, and minimum insurance amounts as prescribed in this Decree and guidelines issued by the Ministry of Finance.

4. Costs for purchasing mandatory insurance in investment construction activities shall be implemented as follows:

a) For construction project insurance during the construction period: Insurance premiums are included in the total investment cost for construction;

b) For professional liability insurance for investment construction consulting: Insurance premiums are included in the product cost of consulting services;

c) For labor protection insurance for workers on construction sites: Insurance premiums are included in production and business costs.

5. In addition to participating in mandatory insurance in investment construction activities according to the responsibilities, insurance premium rates, and minimum insurance amounts prescribed in this Decree, insured parties may also participate in insurance with higher responsibilities, premium rates, and insurance amounts upon agreement with insurance companies and in compliance with relevant laws. Additional insurance purchase costs (if any) shall be implemented as prescribed in Clause 4 of this Article.

6. Contractors participating in civil liability insurance for third parties as stipulated in Clause 3, Article 9 of the Construction Law and in accordance with guidelines issued by the Ministry of Finance.

7. Encouragement is given to organizations and individuals not required to participate in mandatory insurance under this Decree to purchase mandatory insurance in investment construction activities based on agreements with insurance companies and in compliance with relevant laws.

Chapter II

SPECIFIC PROVISIONS

Section 1

OBLIGATIONS TO PARTICIPATE IN MANDATORY INSURANCE IN INVESTMENT CONSTRUCTION ACTIVITIES

Article 4. Objects required to purchase mandatory insurance in investment construction activities

1. Except for works related to national defense, security, and state secrets, the investor or contractor must purchase construction work insurance during the construction period if the insurance fee has been included in the contract price, for the following works:

a) Works or parts of works that affect community safety as stipulated in Appendix II of Decree No. 46/2015/ND-CP dated May 12, 2015 of the Government on quality management and maintenance of construction works and any subsequent amendments, supplements, or replacements thereof (if any);

b) Construction investment works that significantly impact the environment and are listed in the project list requiring environmental impact assessment as provided in Appendix II and Appendix III of Decree No. 18/2015/ND-CP dated February 14, 2015 of the Government on environmental planning, strategic environmental assessment, environmental impact assessment, and environmental protection plans and any subsequent amendments, supplements, or replacements thereof (if any);

c) Works with special technical requirements and complex construction conditions as prescribed by laws on construction and other relevant laws.

2. Consulting contractors must purchase professional liability insurance for consulting investment construction services for construction surveying and design works of construction projects at level II or higher.

3. Construction contractors must purchase insurance for workers working on construction sites.

Article 5. Insurance Period

1. The insurance period for construction works during the construction phase is a specific timeframe from the start date to the completion date based on the investment decision document of the competent authority (including any adjustments or supplements, if any) and recorded in the insurance contract.

2. The insurance period for professional liability insurance for consulting investment construction services starts from the date of performing consulting work until the end of the warranty period for the construction work as prescribed by law.

3. The insurance period for workers working on construction sites starts from the date of performing construction work on the site until the end of the warranty period for the construction work as prescribed by law. The specific determination of the insurance period for workers is based on the labor contract.

Article 6. Scope of Insurance, Exclusions from Insurance Liability

1. Scope of Insurance

a) For construction work insurance during the construction phase: The insurance company shall fulfill the obligation to compensate for all losses of construction works arising from any risks, except for losses specified in Clause 2 of this Article;

b) For professional liability insurance for consulting investment construction services: The insurance company will compensate the consulting contractor for amounts that the consulting contractor is responsible for compensating third-party losses and related costs as prescribed by law arising from the performance of consulting investment construction services, except for losses specified in Clause 2 of this Article;

c) For insurance for workers working on construction sites: The insurance company shall fulfill the obligation to compensate the construction contractor for amounts that the construction contractor is responsible for compensating workers who suffer injury, death due to workplace accidents or occupational diseases within the scope of insurance liability.

2. Exclusions from Insurance Liability

The insurance company shall not be liable to compensate for the following losses:

a) Losses arising from intentional acts;

b) Non-random losses;

c) Losses that cannot be quantified in monetary terms;

d) Catastrophic losses;

e) Losses arising in cases where the insured does not have insurable interests.

3. The Ministry of Finance shall guide the implementation of Clause 1 and Clause 2 of this Article.

Section 2

ARTICLE ON CONDITIONS FOR IMPLEMENTING COMPULSORY INSURANCE IN INVESTMENT AND CONSTRUCTION ACTIVITIES

Article 7. Conditions for insurance companies and reinsurance companies

Insurance companies and reinsurance companies implementing compulsory insurance in investment and construction activities must meet the following conditions:

1. In the License for Establishment and Operation, there must be business operations of property and casualty insurance (for insurance companies); non-life reinsurance operations (for reinsurance companies).

2. Meeting all financial capacity and professional qualifications of staff as stipulated in the Law on Insurance Business and guiding documents.

Article 8. Conditions for reinsured enterprises and foreign organizations accepting reinsurance

In cases of reinsuring abroad, insurance companies and reinsurance companies must reinsure to reinsured enterprises and foreign organizations accepting reinsurance that meet the following conditions:

1. Legally operating according to the laws of the country where the enterprise's headquarters is located.

2. Ranked at least "BBB" by Standard & Poor’s, "B++" by A.M.Best, or equivalent ratings from other rating organizations with the function and experience of rating in the most recent fiscal year of accepting reinsurance.

Article 9. Retention Level

To ensure the financial safety of insurance companies and reinsurance companies and the interests of policyholders, based on financial capacity and risk assessment results, insurance companies and reinsurance companies decide to accept compulsory insurance and reinsurance in investment and construction activities as follows:

1. The retention level for each risk or individual loss shall not exceed 10% of the company's equity.

2. In cases where the insurance company cedes reinsurance under the direction of the insured (fronting), the maximum directed reinsurance ratio is 90% of the insurance liability.

Section 3

MINIMUM INSURANCE AMOUNT, PRINCIPLES FOR DETERMINING INSURANCE PREMIUM RATES

Article 10. Minimum Insurance Amount

1. For construction project insurance during the construction period: The minimum insurance amount is the full value of the project upon completion but shall not be less than the total contract value for construction, including any adjustments and supplements (if applicable).

2. For professional liability insurance for investment and construction consulting: The minimum insurance amount is equal to the value of the consulting and design contract.

3. For laborers working on construction sites: The minimum insurance amount is VND 100 million per person per incident. Specific compensation levels in cases of work-related injuries or occupational diseases are implemented according to the guidelines of the Ministry of Finance.

Article 11. Principles for Determining Insurance Premium Rates

Insurance premium rates for compulsory insurance products in investment and construction activities must be determined based on statistical data, ensuring the solvency of insurance companies and corresponding to insurance conditions, coverage scope, and the minimum insurance amount as guided by the Ministry of Finance.

Chapter III

STATE MANAGEMENT OF COMPULSORY INSURANCE IN INVESTMENT AND CONSTRUCTION ACTIVITIES

Article 12. Responsibilities of the Ministry of Finance

1. Issue rules, insurance terms, and premium rates for the following compulsory insurance products:

a) Construction project insurance during the construction period;

b) Professional liability insurance for investment and construction consultancy services;

c) Insurance for workers working on construction sites.

2. Guide the implementation of reporting and statistical systems; financial regulations for insurance companies and reinsurance companies when implementing compulsory insurance in investment and construction activities.

3. Take the lead and coordinate with the Ministry of Construction, relevant ministries and sectors, and provincial People's Committees to guide and promote the implementation of compulsory insurance in investment and construction activities as prescribed in this Decree.

4. Manage, supervise, inspect, handle complaints and denunciations, and impose administrative penalties on insurance companies and reinsurance companies that violate compulsory insurance regulations in investment and construction activities according to the provisions of the law.

Article 13. Responsibilities of the Ministry of Construction

1. Issue guidelines within its authority regarding construction projects with special technical requirements and complex construction conditions.

2. Guide the establishment of insurance costs in investment and construction expenses.

3. Coordinate with the Ministry of Finance and relevant ministries and sectors to guide and promote the implementation of compulsory insurance in investment and construction activities.

4. Take the lead and coordinate with competent agencies to inspect, audit, handle complaints and denunciations, and impose administrative penalties on policyholders who violate compulsory insurance regulations in investment and construction activities according to the provisions of the law.

Article 14. Responsibilities of Ministries and Sectors

1. Coordinate with the Ministry of Construction to issue guidelines within their authority regarding construction projects with special technical requirements and complex construction conditions.

2. Coordinate with the Ministry of Finance and relevant ministries and sectors to guide and promote the implementation of compulsory insurance in investment and construction activities.

3. Ministries, ministerial-level agencies, and agencies under the Government shall be responsible for organizing inspections, guidance, and the implementation of compulsory insurance in investment and construction activities within their management scope as prescribed in this Decree.

Article 15. Responsibilities of Provincial People's Committees under the Central Government

Provincial People's Committees under the Central Government shall be responsible for organizing the promotion and dissemination of this Decree, coordinating with the Ministry of Finance and the Ministry of Construction to implement compulsory insurance systems in investment and construction activities, and applying preventive and loss-limiting measures.

Chapter IV

IMPLEMENTING PROVISIONS

Article 16. Transitional Provisions

Insurance contracts in investment and construction activities concluded before the effective date of this Decree shall continue to be implemented according to the laws in effect at the time of contract conclusion.

Article 17. Effective Date

This Decree takes effect from February 10, 2016.

Article 18. Responsibility for Implementation

1. The Ministry of Finance shall take the lead and coordinate with relevant ministries and sectors to implement this Decree.

2. Ministers, heads of ministerial-level agencies, heads of agencies under the Government, Chairpersons of provincial People's Committees under the Central Government, and related organizations and individuals shall be responsible for enforcing this Decree./.