Insurance – a pillar of risk management for businesses
The War Committee has updated the JWLA-033 high-risk zone list, adding some dangerous war zones such as Oman, Qatar, Bahrain, Kuwait, Djibouti and Iranian coastal waters.
For maritime insurance, P&I and FD&D ship owner civil liability insurance, which are mutually supported with 12 international P&I Associations, are still valid and have normal insurance coverage. However, some products such as charterer's liability insurance and fixed-fee ship owner liability insurance (Fixed P&I) have issued notices of cancellation for war risks in areas on the JWLA-033 list.
Meanwhile, for ship hull insurance, many international insurers have announced the cessation of war risk insurance for some non-compatible insurance services. The new list of high-risk areas also caused ship hull war insurance premiums to increase sharply, even in some cases reinsurers did not offer premiums for the Persian Gulf, the Strait of Hormuz or the Gulf of Oman.
In the opposite direction, the scope of insurance of goods insurance is still maintained stably when the reinsurers leading the fixed reinsurance program have not applied the cancellation clause related to war risks in this area.
However, the War/SRCC insurance market (war, strike, riot) is recording rapid fee increases and strong fluctuations. Some shipping lines have adjusted or changed routes to avoid dangerous areas, leading to increased logistics, warehousing and transportation costs.
In that context, businesses need to proactively work with transport companies to review bills of lading, monitor general loss claims and promptly notify insurers. At the same time, close coordination with insurance units helps ensure a protective scope suitable for transport routes and the characteristics of goods.
For business interruption insurance, benefits usually only arise when material damage within the scope of insurance causes an interruption of operation. If the interruption is only due to geopolitical factors or changes in transportation policy without accompanying material losses, claim benefits may not be activated. This shows the importance of designing an insurance program from the beginning.
Proactively strengthen "shields" to protect individual customers
Not only businesses, individual customers – especially international tourists – also face many risks when geopolitical instability makes airspace closures, flight cancellations or schedule changes unpredictable.
International travel insurance programs currently clearly stipulate the scope of insurance, including emergency medical benefits, treatment costs when encountering risks abroad, accident insurance and many other supports. These benefits play an important role when passengers face unexpected incidents during their journey.
In Vietnam, Bao Viet Insurance - a non-life insurance company with more than 60 years of operation - is providing a diverse product portfolio such as property insurance, goods insurance, technical insurance, liability insurance and business interruption insurance for the business sector. At the same time, the business also updates information from the international market to advise import and export businesses on maritime insurance, war risks and supply chain protection solutions.
Mr. Quach Thanh Nam - Deputy General Director of Bao Viet Insurance Corporation - said that in the context of increasing geopolitical risks, building transparent insurance solutions, associated with international reinsurance capacity, is an important factor to help customers ensure financial plans and business operations are not interrupted. At the same time, businesses also promote digital transformation in exploitation and compensation processes to shorten processing time and improve service experience.
Faced with economic fluctuations and global risks, insurance is not only a means of payment when an incident occurs, but also plays an important role in the overall risk management strategy of businesses and individuals.
