A full-package insurance package to prepare for unforeseen risks such as the COVID-19 epidemic for enterprises was becoming more and more essential.
The Ministry of Labour, War Invalids and Social Affairs had just released a quick report, summarising the report data from 22 out of 63 provinces and cities nationwide. In essence, more than 800 enterprises stopped operating, reduced scale, or were forced to narrow their production and business. Besides, more than 8,700 workers were affected, of which agriculture, forestry and fisheries accounted for more than 30%. More than 300 businesses had closed because of Covid-19.
In Vietnam, the above insurance had not yet been available.
However, all large and small insurance companies and social insurance in Vietnam answered that there was ‘no’ insurance for businesses or just offer insurance packages for people (workers). Le Bich Lien, Manulife Insurance Company, said that Vietnam currently did not have any insurance package for ‘epidemics’ or ‘prevention of disease’ for businesses to cope with a global pandemic like Covid-19. The constituent elements of an enterprise included labour, tangible assets like workshops, machinery, equipment, and intangible assets like brand, reputation.
Nevertheless, as a rule, the material damages in Vietnamese companies, mainly factories stopping production due to lack of raw materials, were then in the non-life sector. But this sector also rarely had a package for disaster risk. If so, it was often for agricultural companies dealing with crop diseases.
Therefore, businesses that wanted to avoid risks when a pandemic occurred, depending on conditions, would prevent risks by one or more insurance packages corresponding to the constituent elements. Some businesses that focused on human resources would buy emergency life packages or ‘corona packages’ for employees. Companies that focused on financial capital should purchase business interruption insurance package.
Nguyen Van Tien, director of a packaging company in Hai Phong, said that due to the epidemic, the company had to leave its employees but still supported basic salary. The company had applied for debt rescheduling and interest rate reduction, but the disease situation was unpredictable. If it continued for a few more months, there would be a risk of bankruptcy.
Tien also said, if his company bought more commercial credit insurance packages, business interruption insurance, disaster risk insurance, factory fire insurance, etc., the business would lose all interest. Thus, they had to accept the risk.
Global enterprises also lack initiative
Economists said that only a few major global firms bought insurance packages to cover the disease. Therefore, after the disease had occurred, many businesses suffered regret because they had not purchased insurance.
Confirming this, a lawyer operating in the insurance industry in Hong Kong told Reuters news agency that only a few major global firms bought insurance packages, including disease. Most standard insurance policies often eliminated the risk of disease outbreaks to reduce costs, the lawyer said.
According to Reuters, insurance companies often provided a service package to ensure the risk of earthquakes or plane falls but ignored many significant threats to avoid losses.
Previous outbreaks of SARS, Ebola and Zika viruses had made many insurance companies wary of damage. Since then, the provisions excluding compensation for specific illnesses had been added to the original insurance packages.
Severe acute respiratory syndrome (SARS) in 2000 had spread to a total of 37 countries, causing economic losses of up to $4 billion in Hong Kong, $3 billion to $6 billion in Canada and $5 billion in Singapore, according to Marsh insurance broker.
Insurance experts also said that most cancellation policies would not compensate for the new virus.
