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Viet Nam
Industrial Park Situation
Text by Saito Hiroshi
The 28th: Damage Insurance
For businesses engaged in manufacturing in Vietnam, it is common to enroll in property insurance in advance. To cover damages from natural disasters such as fire and lightning, liability accidents, and damages during construction, various types of insurance are available in Vietnam. This article aims to provide guidance on the types of insurance that can be obtained in Vietnam and the procedures involved.
Types of insurance
Depending on the insurance company, here are some examples of services available for businesses:
1. Marine cargo insurance
This insurance covers raw materials, products, and other items during transportation. It provides coverage for all basic risks that may occur; however, depending on the trade terms, there may be instances where insurance is not provided.
2. Construction insurance
This insurance addresses various risks related to construction, including coverage for construction objects, temporary facilities, and liability for damages to existing properties or contractors.
3. Liability insurance
This insurance covers claims for damages from shareholders related to facilities owned by the business, as well as products and services produced. It includes payments for damages such as judgment amounts or settlement sums, as well as costs incurred during litigation and attorney fees.
4. Automobile insurance, marine insurance
This insurance covers various damages arising from the ownership, use, and management of vehicles used in construction. Additionally, marine insurance provides coverage for damages incurred by vessels engaged in construction activities during the work period.
5. Cyber insurance
Cyber insurance has gained significant attention in recent years. It covers costs related to data breaches due to unauthorized access, expenses for recovery from data loss, and profit losses resulting from cyber incidents. Vietnam is ranked as the 18th country in the world for the number of cyber attack incidents, with malware attacks being the second highest in Southeast Asia. Therefore, verifying insurance coverage against cyber attacks is extremely important.
Additionally, there are insurance options available for individuals working in companies within Vietnam, such as workers’ compensation insurance that covers workplace accidents and health insurance that addresses injuries and illnesses.
Arrangement
In Vietnam, regulations are in place to protect the domestic insurance industry, which restrict foreign insurance companies from providing coverage. As a result, it is not possible to obtain insurance in Japan in advance. Therefore, businesses must seek out agents or front companies abroad and enter into contracts with them. Below, we will introduce some representative methods for making these arrangements.
1. Obtain coverage through a subsidiary or agent of a Japanese insurance company.
Contracts can be established if a Japanese insurance company has a subsidiary in Vietnam or is contracted with a prominent local agent. This allows for insurance services similar to those available in Japan, and many of these services are often provided in Japanese.
2. Fronting contract
In the fronting contract method, a Vietnamese insurance company issues the insurance policy, while a significant portion of the underwriting is reinsured by a Japanese insurance company. This arrangement effectively means that the insurance services are being provided by a Japanese insurance company, which reduces the burden compared to engaging directly with foreign insurance companies.
The contract methods mentioned above exist. To obtain specific insurance coverage, it is necessary to submit a questionnaire along with the required documents and any additional documents specific to each type of insurance.
Procedure
The procedures may vary depending on the insurance company and the specifics of the insurance, but below are the basic steps involved in the process.
1. Marine cargo insurance.
First, contact the insurance company to report the details of the incident. Since the damages incurred will require an inspection by the insurance company’s adjuster, it is necessary to preserve the situation and prevent further damage. For the cargo, both the interior and exterior should be examined, and any abnormalities must be noted in the delivery documents. By submitting the necessary documents specified by the insurance company, you will be able to claim the insurance payout.
2. Liability insurance.
Notify the insurance company promptly at the time of the incident and provide a detailed explanation of the accident. Key information needed includes the date and time of the incident, the cause of the accident, and, if applicable, the name, address, and treatment location of any injured parties, as well as the claims made by them. After the accident occurs, it is necessary to preserve the scene and prevent further damage until the adjuster arrives, and to negotiate with the victims. Following this, the required documents should be submitted to complete the claim process.
Although it is overseas, there are no insurance policies that are unique to Vietnam; the basic content can be considered similar to that of Japan. However, due to the language differences, there may be issues arising from differing interpretations of the insurance terms. Many Japanese insurance companies have established subsidiaries in Vietnam to address these concerns, so it is advisable to consult with the insurance company in advance to confirm the necessary insurance and its details for your business.
齊藤公(Saito Hiroshi)
Business Advisor
G.A. Consultants Vietnam Co., Ltd
After graduating from university, he joined a PHP research institute and served as the head of the New York office. He then worked on the “Nagoya Port Redevelopment Project” at a subsidiary of the Chubu Nippon Broadcasting (CBC) company. He later shifted his base to Asia, where he was involved in the launch of “FM96.3” in Singapore, and the creation of “Hello Vietnam” and “Invest Asia” magazines in Vietnam. He then joined BW Industrial Development JSC, Vietnam’s largest rental factory development company, where he was responsible for attracting Japanese manufacturing companies. Currently, he is active as a consultant for the entry of Japanese companies at “G.A. Consultants”, one of the longest-standing Japanese HR consulting firms in Vietnam.
