As most current standard insurance policies do not present risks from disease outbreaks on insurance terms.
While many businesses are struggling due to the Covid-19 epidemic because of the interrupted supply chain of goods or a serious decline in the number of customers, the questions are whether these enterprises’ financial losses will be covered by insurance companies and whether the insurance industry plays a role in the survival and recovery of these businesses after the disease is under control. According to Truong Minh Duc, Deputy General Director of PVI Joint Stock Company, the parent company of the two units of PVI Insurance Corporation and PVI Reinsurance Corporation, currently, PVI's insurance policies for corporate customers do not include the risks and impacts of the disease on their operations and business results.
Duc cited that according to the Ministry of Finance's regulations, all epidemics declared by the government will not be covered by economic-related insurance, but will only be covered health-related insurance. "For PVI's customers when an epidemic occurs, PVI is not responsible for compensating for economic-related losses," Duc said. Like PVI, many non-life insurance companies in Vietnam also have no policy to pay for material damage in businesses caused by the Covid-19 epidemic or other diseases. In fact, standard insurance policies at many insurance companies in Vietnam and around the world often do not consider risks of disease as reasons to reduce insurance costs for businesses.
Except for some large enterprises in the world, who will accept to spend large sums of money to buy insurance for material losses due to epidemics. There has been a lot of debate about whether an epidemic can have a negative impact on an enterprise's business, causing direct economic losses. However, insurance policies such as business interruption insurance, which covers lost income for workers and additional expenses, are often confined to a scope that excludes diseases such as Covid-19 or the SARS of 2003.
However, there are still specific insurance policies such as supply chain insurance applied by some insurance companies around the world such as supply chain risk insurance, in which businesses will be covered by insurance for business interruption due to the delayed supply chain and do not require any loss of physical assets.
However, such specialized insurance usually comes with a huge insurance cost. Jens Holger Wohlthat, PVI's Chairman of the Board of Directors, said the insurance business was often based on probability and was not a bet. This probability, accordingly, could only be based on accurate and reliable statistics.
"For commercial insurance, we can ensure that losses from risks have been calculated based on reliable statistics," Jens Holger Wohlthat said in a workshop held in Hanoi on February 24. The operation of insurance companies, according to Mr. Jens Holger Wohlthat, is based on three factors: reliable statistics, plural laws or the acknowledgment that there are enough similar risks to be protected, and finally insurance companies' honesty in discussing risks that may arise with customers and reimbursement to customers.
“It is not that we do not want to cover material losses due to epidemics in this case, but in my opinion, we will not be able to provide a complete insurance policy due to the aforementioned reason,” said Jens Holger Wohlthat.
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