1. The causes are fairly limited: fire and natural catastrophes

2. The benefits are: a duplication of the average costs/ revenue of your business

3. The proof and claims procedure: showing past year audited accounts

In Vietnam, all 3 straightforward conditions are revised constantly, mostly due to insurance frauds and abuses in Vietnam. The most common is ailing business would burn down their factory -having displaced valuable assets beforehand- to collect insurance money to build a brand new factory and live on for 3-to-6 months 

As insurance laws do not exist, therefore the written contract between the insurer and the client becomes binding. 

Unfortunately most contracts are largely man-made out of little experience and tailormade to the risk each insurer is ready to take.

Recently, as Covid19, a pandemic has for decades been deemed uninsurable as an ‘Act of God’, as it is declared by the WHO, turning the risk to governments would become the supreme insurer to indemnify losses.

Some insurers in Vietnam would sell a policy to make a sale; taking the premium and hoping the catastrophe will not happen, always ready for the upside but not the downside.

Our experience is to assess the economic and practical aspects of business interruption with the Vietnam insurer. A bit similar to an recruiting interview, we would check: 

– How strategic is it to the insurer

– What experience they have

– How the clients claims were handled

– What capital is allocated to losses or re-insured to whom?

Our 5-criteria screening: Security | Benefits | Flexibility | Costs | Admin Claim

Specifically for Business interruptions coverage, we will review:

CAUSES: confirm he list of covered causes and exclusions

BENEFITS: needed by clients vs acceptable by the insurer

CLAIMS: procedure and documents requested, being the most important

NB. Good insurers in Vietnam are very ‘conservative’ and in doubt or ignorance, they would not accept to do business. On the contrary, bad insurers would readily accept to sell you insurance for your premium with the hope the catastrophe will not happen to you, knowing they can mitigate their payment. Not very ethical for a State-owned insurer but our job is to figure out what Warren Buffett says “It is when the tide recedes that we can see who has been bathing naked”.