Compulsory fire and explosion insurance: Strong sanctions are required

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Fires have occurred and caused serious consequences not only to the victims but also to the community. Photo: Internet.

A solid legal framework

With the risk of fire and explosion, not all agencies, organizations and individuals have conditions and financial capacity to overcome the damage, restoration of investment, production and business activities. Therefore, joining the compulsory fire and explosion insurance will contribute to overcoming financial losses, quickly restoring conditions of investment, production and business.

In fact, the compulsory fire and explosion insurance has been implemented since 2006 under Decree No. 130/2006 / ND-CP and Decree No. 46/2012 / ND-CP. These legal documents have created a transparent legal framework for insurance enterprises; raising awareness about the compulsory fire and explosion insurance and the sense of prevention of fire and explosion risks for organizations and individuals. This is also a tool for relevant ministries and agencies in the management and monitoring of the compulsory fire and explosion insurance.

Recently, the Government issued Decree No. 23/2018 / ND-CP stipulating compulsory fire and explosion insurance, applicable from 15 April 2018. According to Mr. Nguyen Quang Huyen, Deputy Director of the Insurance Management and Supervision Department of the Ministry of Finance, at present, Decree 23/2018 / ND-CP plays an important role, creating a favorable legal corridor to expand the participation in compulsory fire and explosion insurance. There are more resources to ensure better fire prevention and fighting. At the same time, this Decree helps raise the awareness of organizations and individuals in risk prevention, in line with fire prevention and fighting regulations, speeding up the work of assessment results, thereby making compensation to insured enterprises in a quicker and timely manner, to help organizations and individuals restore their lives, produce business again, and contribute to ensuring social order and safety.

Emphasizing the importance of Decree 23/2018 / ND-CP, Deputy Chief of Police Department of Fire and Rescue (Ministry of Public Security) Bui Quang Viet said that " The compulsory fire and explosion insurance is extremely necessary. In the context of the recent past, fires have occurred and caused serious consequences not only to the victims but also to the community. In addition, the funds from fire and explosion insurers to the Fire Fighting Police has contributed significantly to prevention of loss in material forms (support for fire prevention and fighting equipment and facilities) and immaterial forms (support for propagation and dissemination of laws, knowledge on fire prevention and fighting and the compulsory fire and explosion insurance).

No purchase and no sale will be fined

According to the provisions of Decree No. 23/2018 / ND-CP, agencies, organizations and individuals having condominiums of 5 storeys or more or volume of 5,000 m3 or more, insurance enterprises shall implement the compulsory fire and explosion insurance according to the conditions, premium rates and minimum insured amount stipulated in this Decree. However, according to statistics from the Police Department of Fire Prevention, Fighting and Rescue (Ministry of Public Security), there are currently 43,693 fire-explosion sites in the country. It is worth mentioning that the figure only accounts for 56% of the total number of establishments subject to the compulsory fire and explosion insurance.

Mr. Nguyen Quang Hien said that according to Decree 167/2013 / ND-CP, if the individuals and organizations are required to buy the compulsory fire and explosion insurance but they do not comply, they will be fined from VND 30-50 million for individuals and VND 60-100 million for an organization. In addition, Decree 98/2013 / ND-CP also stipulates that insurers are fined VND 40-50 million when they refuse to sell the compulsory fire and explosion insurance to individuals and organizations. Enterprises selling fire and explosion insurance (including condominiums) only have the right to refuse to sell the compulsory fire and explosion insurance when meeting the following conditions: - Establishments which have not been accepted for fire prevention and fighting according to the provisions of the Law. The establishments have no written records of fire prevention and fighting safety inspection by the fire prevention and fighting police or the inspection records have been expired for more than one year from the time of buying the compulsory fire and explosion insurance; the establishment is suspended from operation for violating the regulations on fire prevention and fighting.

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It can be said that although Decree No. 23/2018 / ND-CP sanctioned regulations on supervision and compliance with the participation in the compulsory fire and explosion insurance for apartment buildings, however, the management and the sanctions of the authorities are still not rigorous. Therefore, the status of units and establishments without fire insurance under the purchase of the compulsory fire and explosion insurance is still quite popular. In order for this decree to be effective, the regulator should have stronger penalties for everyone to comply strictly, with specific provisions.