Pay up PVI-Bibica’s $5.16 million insurance claim enforced

October 27, 2016 | 14:23

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Insurer PVI, a PetroVietnam member company, is going to pay a total compensation of VND115.2 billion ($5.16 million) to customer Bibica in a claim that has been going for three years.

The appeal sentence issued on October 11, 2016, stipulated that confectioner Bibica is entitled to the hefty compensation Of the amount, PVI has already paid VND53.88 billion ($2.41 million) in advance, leaving VND61.33 billion ($2.75 million), of which VND53.88 billon ($2.41 million) is compensation and VND7.45 billion ($334 million) is interest due to slow payment.

On June 16, 2010, Bibica signed a mandatory fire and explosion risk insurance with PVI’s Ho Chi Minh City branch, covering the office, workshop, warehouse, equipment, materials, ingredients, tools, and goods at the Bibica Binh Duong plant. The contract was valid for one year, starting from 4pm of June 15, 2010 and had a premium of VND229.9 million ($10,300) with the insured assets of VND220 billion ($9.86 million).

In 2011 there was a fire at Bibica Binh Duong, causing severe damage to the plant’s equipment. The reason for the fire was established as a power mishap. The two sides could not agree on insurance compensation, despite Bibica’s willingness to accept progressively lower sums.

PVI only agreed to pay an amount proposed by independent appraisal company Crawford Vietnam, which was VND108 billion ($4.85 million). Bibica took its claim to the Ho Chi Minh City People’s Court, which determined a compensation of VND115 billion ($5.15 million). Both parties appealed.

Vu Bao Lam, deputy general director of PVI, said that the company is going to pay Bibica soon. He said the company had been provisioning for this payout. “Also, we reinsured a part of this contract, so the reinsurers are going to bear a part,” he said.

Though Bibica is soon coming into cash, this seemingly good news failed to raise enthusiasm for the company’s stock.

Some observers claimed that positive reaction has been tempered by the lengthy judicial proceedings and the outcome falls short of Bibica’s expectations at the time of starting procedures.