With the difficulties around arriving at a mutually-acceptable damage assessment and insurer PVI's past handling of the fire insurance claim of Bibica, Rang Dong may be in for a long wait to receive insurance.
|Rang Dong estimated its damage at VND150 billion ($6.52 million) |
After the fire, local lightbulb manufacturer Rang Dong estimated its damage at VND150 billion ($6.52 million), submitting its claim accordingly to PetroVietnam Insurance JSC (PVI), the insurer. However, the amount of compensation and the kind of assets covered by the insurance have yet to be revealed.
Assessing fire damage is a complex task for insurers because potential risks go further than the physical goods destroyed directly by the flames. According to a leader of an insurance firm, who wishes to be unnamed, compensation does not reflect the magnitude of the damage companies suffer from fires.
“There is a sizable backlog of insurance claims related to fire damage at many insurers because the required compensation is pretty high,” said the leader. “Moreover, there is always a risk of profiteering on the part of the applicant when assessing fire damage, so finding out the main reason behind the fire and the true extent of the damage is quite tough in some cases.”
Another issue raising questions about a swift handling of Rang Dong's case is the identity of the insurer, PVI, who came out on the losing end of a lawsuit over a significant fire damage-based insurance claim lodged by confectionery producer Bibica.
In 2011, Bibica's manufacturing lines caught fire and its damage at the time was estimated at VND139 billion ($6 million). However, PVI denied compensation because the claim was bigger than the VND108 billion ($4.7 million) damage assessed by independent surveyor Crawford Vietnam. Bibica took the case to court, to reach a decision five years later in October 2016. The court decided in favour of Bibica, ordering PVI to pay VND115 billion ($5 million) in compensation.
With the difficulties of assessing fire damage and based on PVI's handling of Bibica's case, Rang Dong may be in for a long wait for its insurance dues.