Workers on the construction site of Noi Bai International Airport Terminal 2. — Photo VNA

HA NOI (Biz Hub) — In a move to ensure workers' safety and regulate construction related insurance mechanism, project owners and contractors undertaking construction work would now be under obligation to purchase insurance for their work and workers, a draft decree issued for the purpose recently said.

According to the draft, prepared by the Ministry of Finance, compulsory construction insurance would be required in case of important national projects, large-scale complex construction works and works that may potentially affect community safety or the environment, and works subject to special technical requirements.

Contractors undertaking construction survey and design for construction works of grade II and higher would be obliged to buy professional liability insurance, while construction contractors would have to purchase insurance for their construction workers.

The insurance compensation for any damage caused to a construction work would equal the full value of the work and must not be less than the contractual value.

Meanwhile, an insurance compensation worth VND100 million (US$440,000) would have to be paid to kin of a worker who dies due to any accident at the construction site.

The draft further sets detailed conditions for construction insurers and reinsurers.

Specifically, a non-life insurance firm wishing to sell compulsory construction insurance must be licensed to provide asset and damage insurance.

As for the reinsurers, their equity must at least be equal to the legal capital, while their solvency margin must not be lower than the minimum solvency margin as regulated.

Particularly, foreign reinsurers must enjoy a rating of at least "BBB+" by Standard & Poor's or Fitch, "B++" by A.M.Best, "Baa" by Moody's or obtain equivalent ratings in the fiscal year immediately preceding the year of entry into reinsurance contracts.— VNS