Homeowners need to be insured

After the fire at the 18-story Thanh Xuan apartment block in Hanoi, many have inquired if their buildings are insured and the answer in many cases has been ’no’.

There are no official statistics about the number of households in high-rise buildings in Vietnam. Dau Tu Chung Khoan newspaper speculates that the figure could be several hundreds of thousands. In HCM City, over 1000 apartment blocs have been built, and a similar number of buildings have been reported for Hanoi.

High-rise apartment blocks cover a large space in Viet Hung urban area in Hanoi. Reporters have discovered that their price includes only the VAT, but does not include fire and explosion insurance. Every owner must decide whether or not to take out their own insurance policy.

Most families have not taken out insurance policies because many believe that this is a kind of risk will never touch them.

Under current laws, fire and explosion insurance policies are compulsory for high-rise buildings, but it seems that no one is overseeing the law’s implementation.

According to Bao Viet Insurance Group, high-rises bring less than five percent of their fire and explosion insurance premiums. The premium is about 0.1-0.2 percent of the construction and installation of the building.

Moreover, production workshops are also ignoring the law on compulsory fire and explosion insurance.

According to the Ministry of Finance, 30,256 establishments are subject to compulsory fire and explosion insurance nationwide. However, only 42 percent of them (12,712) have taken out insurance in the last two years since the law on compulsory fire and explosion insurance took effect.

The total value of assets insured, according to the ministry (both compulsory and voluntary policies) is 5,174,857 billion dong. Total property insurance premiums, including compulsory fire and explosion insurance are equal to 2,634 billion dong. Of this amount, premiums from compulsory fire and explosion insurance are 180 billion dong (6.83 percent)

The low premiums from of fire and explosion insurance are because people do not want this insurance because they are not aware of its importance. Also, insurance companies themselves do not really want to push sales.

The Association of Vietnam Insurers (AVI) cites the unhealthy competition among insurers, which has forced premiums down and expanded conditions for compensation. In many cases, enterprises must accept low premiums even in high risk situations, accepting exorbitant compensation conditions.

Analysts noted that, after the fire at the apartment bloc, many people will take out fire and explosion policies because they better understand the risks they are facing. They predict that the number of such clients will not be big and that the market share will not expand.

VietNamNet/DTCK

Tags: Vietnam house insurance, vietnam real estate market