JLT conference signposts common pitfalls for real estate developers

The JLT conference advised a comprehensive insurance policy as key to managing risk

At the conference, entitled “Real Estate Development: Effective Risk Management Solutions”, Nguyen Thi Thanh Huong, deputy CEO of PetroVietnam Insurance (PVI South) said real estate developers had been co-operating with insurers to manage the risks they face, but there were three things that resulted in this co-operation being not as effective as initially hoped for.

Developers are not providing enough information, and then because insurers lack information, they have trouble evaluating the risk. In addition, there is poor communication when drafting the insurance contract, so when something unexpectedly happens, developers ask insurers to take responsibility. Additionally, developers tend to choose cheap policies, while the quality of the policy depends on the ability to pay and the experience of the insurer.

JLT Vietnam’s deputy CEO Nguyen Phuc Hieu Thao shared that there were two main core insurance programmes in the market such as Construction All Risks Insurance (CAR) and Professional Indemnity Insurance (PI) could be arranged to meet the new Law on Construction, effective from January this year. He also highlighted that it would be more efficient if the CAR and PI were arranged by the developer rather than each individual contractor and consultant. In that way all the policies are under one control and will be easier to manage. Moreover, the total cost would be lower.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, said that in the last months of the year, the real estate market would continue its recovery after a long period of inactivity. The participation of investors, domestic and foreign, will lead to an increase in supply.

JLT is a leading UK insurance broker, which provides insurance, reinsurance employee benefit and risk management services in 39 countries and territories.