Joint Circular No. 41/2007/TTLT-BTC-BCA guiding the implementation of certain provisions of Decree No. 130/2006/NĐ-CP dated November 8, 2006 on compulsory fire and explosion insurance regime

JOINT CIRCULAR

Guidelines for Implementing Certain Provisions of Decree No. 130/2006/NĐ-CP

dated November 8, 2006 on Compulsory Fire and Explosion Insurance

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On November 8, 2006, the Government issued Decree No. 130/2006/NĐ-CP on Compulsory Fire and Explosion Insurance (hereinafter referred to as Decree No. 130/2006/NĐ-CP). The Ministry of Finance and the Ministry of Public Security have jointly established guidelines for implementing certain provisions of this Decree as follows:

I. SCOPE OF REGULATION AND APPLICABLE SUBJECTS

1. These Circulars provide guidance on the implementation of the compulsory fire and explosion insurance regime for assets of entities required to purchase such insurance; the responsibilities of insurance companies in setting aside funds for fire prevention and firefighting activities (hereinafter abbreviated as PCCC) and the management mechanism for the allocation, payment, and settlement of these funds.

2. These Circulars apply to agencies, organizations, and individuals with premises at risk of fire and explosion as specified in Appendix 1 of Decree No. 35/2003/NĐ-CP dated April 4, 2003 detailing the implementation of certain provisions of the Law on Fire Prevention and Fighting (hereinafter referred to as Decree No. 35/2003/NĐ-CP) and insurance companies permitted to operate compulsory fire and explosion insurance.

II. IMPLEMENTATION OF THE COMPULSORY FIRE AND EXPLOSION INSURANCE REGIME

1. Agencies, organizations, and individuals with premises at risk of fire and explosion as specified in Appendix 1 of Decree No. 35/2003/NĐ-CP must purchase compulsory fire and explosion insurance for the assets of those premises.

2. Insurance companies permitted to operate compulsory fire and explosion insurance are those companies holding licenses for establishment and operation - insurance business issued by the Ministry of Finance.

3. Responsibility for purchasing compulsory fire and explosion insurance

a) For premises required to purchase mandatory fire and explosion insurance, the head of the agency, organization, or individual owning the premises shall be responsible for purchasing such insurance.

b) For premises where there are multiple households such as apartment buildings or within a single premise where multiple agencies, organizations, or individuals lease space, the responsibility for purchasing compulsory fire and explosion insurance shall be implemented as follows:

- In cases where the owner of the premises or the person entrusted by the owner to manage it or the common representative (hereinafter collectively referred to as the representative) can be identified, that person shall be responsible for purchasing the insurance. Each household, agency, organization, or individual shall be responsible for paying the insurance premium to the representative. In this case, the insured party is each household, agency, organization, or individual who has paid the premium to the representative.

- In cases where no representative can be identified, each household, agency, organization, or individual within the premises shall be directly responsible for purchasing mandatory fire and explosion insurance.

4. Insurance companies, agencies, organizations, and individuals implementing the compulsory fire and explosion insurance regime shall follow the rules and premium rates for compulsory fire and explosion insurance issued by the Ministry of Finance. In the event of loss, determining the cause of the fire or explosion leading to the loss falls under the responsibility of the competent public security authority.

5. Provisions regarding the objects and assets required to purchase compulsory fire and explosion insurance; the minimum amount of compulsory fire and explosion insurance; compulsory fire and explosion insurance contracts, and other provisions concerning the compulsory fire and explosion insurance regime shall be implemented according to Chapter II of Decree No. 130/2006/NĐ-CP.

6. The Fire Prevention and Fighting Police Department shall be responsible for

a) Guiding premises required to purchase compulsory fire and explosion insurance to self-inspect fire safety and implement fire safety conditions as stipulated in Article 9 of Decree No. 35/2003/NĐ-CP.

b) Conducting quarterly inspections of fire safety conditions for premises at risk of fire and explosion; conducting spot checks when there are signs of danger, loss of fire safety, or special requests. Inspection reports must conclude whether the premises meet or fail to meet the fire safety conditions as stipulated in Article 9 of Decree No. 35/2003/NĐ-CP.

7. The Fire Prevention and Fighting Police Department shall issue certificates of compliance with fire safety conditions for premises at risk of fire and explosion as specified in Appendix 2 of Decree No. 35/2003/NĐ-CP.

The procedures and formalities for issuing certificates of compliance with fire safety conditions shall be carried out according to the provisions of Section VII of Circular No. 04/2004/TT-BCA dated March 31, 2004 of the Ministry of Public Security guiding the implementation of Decree No. 35/2003/NĐ-CP.

8. Insurance companies shall only enter into compulsory fire and explosion insurance contracts with the policyholder when the policyholder has been issued a Certificate of Compliance with Fire Safety Conditions by the Fire Prevention and Fighting Police Department or has a Report concluding that the premises meet fire safety conditions.

Insurance companies may not refuse to sell compulsory fire and explosion insurance when the policyholder has fulfilled the fire safety conditions stipulated in Clause 2 of Article 13 of Decree No. 130/2006/NĐ-CP.

Quarterly, insurance companies shall be responsible for preparing reports on the results of compulsory fire and explosion insurance operations according to Appendix 2 attached to this Circular and submitting them to the Ministry of Finance.

III. METHODS OF CONTRIBUTING TO FIRE PREVENTION AND FIGHTING ACTIVITIES

1. Insurance companies operating compulsory fire and explosion insurance shall be responsible for contributing 5% of the total premiums collected from compulsory fire and explosion insurance to fund fire prevention and firefighting activities.

Within 15 days from June 30 and December 31 each year, insurance companies shall be responsible for transferring the contribution amount for fire prevention and firefighting activities into the Temporary Account of the Ministry of Public Security opened at the State Treasury and reporting the implementation status according to Appendix 3 attached to this Circular and submitting it to the Ministry of Finance.

2. For comprehensive insurance policies including compulsory fire and explosion insurance, insurance companies shall be responsible for separating the compulsory fire and explosion insurance portion through an attachment to the contract and ensuring it includes all contents as prescribed in Article 9 of Decree No. 130/2006/NĐ-CP.

3. Within 90 days from the end of the fiscal year, insurance companies shall be responsible for preparing a final report on the source of funds to be contributed for fire prevention and firefighting activities according to Appendix 4 attached to this Circular and submitting it to the Ministry of Finance.

Insurance companies shall be responsible for reconciling the amounts paid with the figures in the final report on the source of funds contributed. If the amount paid exceeds the amount due, the excess amount shall be carried forward to offset the payment for the next year; if the amount paid is less than the amount due, the company shall be responsible for making up the shortfall within five days.

The Ministry of Finance shall verify the accuracy of the reported figures and urge insurance companies to pay the required contributions in full.

IV. MANAGEMENT, ISSUE, PAYMENT, SETTLEMENT OF FUNDS CONTRIBUTED FOR FIRE PREVENTION AND FIGHTING ACTIVITIES

1. Annually, based on the content of expenses under Clause 2, Section IV of this Circular, the revenue from the previous year, and the anticipated revenue for the planned year, the Ministry of Public Security shall prepare the budget estimate for revenue and expenditure from funds contributed for fire prevention and fighting activities, to be included in the annual budget estimate of the Ministry of Public Security and submitted to the Ministry of Finance for consolidation and submission to the competent authority for decision.

2. The source of funds amounting to 5% of the revenue from mandatory fire and explosion insurance shall be used for fire prevention and fighting activities with the following contents:

a) Investment in equipping firefighting equipment and devices for the Fire Prevention and Fighting Police Force. The level of expenditure for this content shall not be less than 70% of the actual expenditure for fire prevention and fighting activities in the year; the remaining funds up to a maximum of 30% shall be allocated for the activities specified in points b and c of this clause.

b) Support for propaganda, guidance, and dissemination of legal knowledge and general knowledge about fire prevention and fighting to the entire population. The content and level of expenditure for these activities shall be implemented according to Circular No. 63/2005/TT-BTC dated August 8, 2005, issued by the Ministry of Finance, guiding the management and use of funds to ensure legal awareness and education activities.

c) Supporting rewards for achievements in fire prevention and fighting work for the following subjects:

- Organizations and individuals directly involved in fire prevention and fighting tasks;

- Organizations and individuals participating in cooperation in fire prevention and fighting work.

The maximum reward shall not exceed five million Vietnamese dong for groups; three million Vietnamese dong for individuals. The Ministry of Public Security shall provide specific guidelines for rewards and reward funds for organizations and individuals who have achieved results in fire prevention and fighting work.

Every six months, the Ministry of Public Security shall be responsible for processing the accounting of funds from the temporary holding account into the state budget. At the end of the year, the difference between the fees revenue accounted for in the budget and the initial budget estimate for the year will be deducted or supplemented into the budget estimate for revenue and expenditure from mandatory fire and explosion insurance funds for the following year.

The Fire Prevention and Fighting Police Department of the Ministry of Public Security shall receive, manage, and utilize the funds contributed for fire prevention and fighting activities from insurance companies.

The Central Treasury shall monitor expenditures when disbursing funds for fire prevention and fighting activities according to the approved budget.

Annually, the Ministry of Public Security shall be responsible for reviewing and settling accounts for expenditures from funds contributed for fire prevention and fighting activities, to be consolidated into the settlement of the state budget of the Ministry of Public Security and submitted to the Ministry of Finance for consolidation and submission to the competent authority for decision.

Funds contributed for fire prevention and fighting activities from mandatory fire and explosion insurance that remain unspent at the end of the year may be carried over to the next year for continued allocation according to the guidelines set forth in this Circular.

V. IMPLEMENTATION

This Circular shall take effect fifteen days from the date of publication in the Official Gazette. Any difficulties arising during implementation should be reported to the Ministry of Finance and the Ministry of Public Security for timely guidance./.