Evaluate factors effecting claims management operation in car insurance of bao viet insurance 2012 2016

Cohort 2016-2018

Master’s Thesis
“Evaluate factors effecting claims management operation in car insurance of Bao
Viet Insurance ( 2012-2016 )”

Author: Pham Viet Hung
Supervisor: Dr. Nguyen Hai Duong

HaNoi, May 2018



CHAPTER ONE: INTRODUCTION
1.1. Rationales of research
- Situation of traffic accidents and accidents:
There are over 3 million cars nationwide. By 2016, the volume of imported cars
and domestically produced cars reached 300,000 units. According to the National
Traffic Safety Committee, there were 21,589 traffic accidents causing 8,885 deaths
and 19,280 injuries in 2016, which cost billions of dong. Accidents occurring with
sleeper bus, container trucks and heavy trucks have caused serious and increasing
losses, affecting the society's finance, so buying Car insurance is a necessity for
Vietnam today.
Car insurance is a collection of insurance operations associated with the risks of
road traffic accidents, including: Car material insurance, car owner‟s civil liability
insurance for the third party, owner‟s civil liability insurance for cargoes and
passengers... In which, civil liability to the third party and Car material insurance
are two main types deployed in Vietnam today.
Car material protection is not only a preventive measure to limit the damage
caused by accidents, but also a protection of the owner from other possible risks
such as theft, explosion ... Then, the car owner or driver will be covered all or part

of the financial losses. This helps them to stabilize their lives and continues to
participate in production and business. Thus, Car insurance in general and Car
material insurance in particular are becoming increasingly important and necessary
to every individual, organization and society.
- How are Bao Viet and its situation of vehicle insurance currently?
According to data of the Insurance Supervision and Management
Department, total assets of the whole market in 2016 reached approximately VND
240 trillion, an increase of 27% compared to 2015. Total investment to the
economy in 2016 reached nearly VND 187 trillion, up 24%. Total premium
revenue reached VND 86 trillion, of which non-life insurance reached VND 36
trillion, a growth of 13% over 2015
- The work of claim and investigation in Car insurance plays an important
role:


Although Car insurance is still a major contributor to the non-life
insurance industry, it has the highest ratio of claim. In 2016, a letter of
the leader of a large insurance company in the market was sent to adjust
the claim ratio of Cars which had been over the allowed threshold,
influencing significantly to its business results. Until the beginning of
2017, another insurance company with its safe business strategy must
hold an extraordinary meeting to rectify the underwriting activities and
compensation of Cars in the context of the increasing claim ratio of Cars.
There are two very important areas including underwriting and claim
management in the operation of Car insurance, in which the Claim
management is the decisive stage for right liability compensation of the
insurance company and the right interests of customers as well as to
ensure business efficiency, towards sustainability in the development of
BaoViet Insurance as well as the operation of Car insurance, bringing
customers „confidence about BaoViet Insurance.

As a leading company in Vietnam insurance market, Bao Viet Insurance is
aware of the danger when its key business is not effective, affecting the overall
business efficiency of the business, causing potentially great consequences for
business, society and insurance buyers. Bao Viet Isurance has issued a number of
short-term and long-term measures to reduce the risks of Car business, including
adjustments to the Claim management.
Studying on the Claim management in Bao Viet Insurance is an urgent
requirement in the operational process of the insurance industry in general and Bao
Viet in particular, meeting the requirements of business efficiency, Bao Viet brand
name value and level of competition
1.2 Objectives, Subject and Scope of Research
1.1.1. Research objectives
- Systematize theoretical basis related to the management of claim in Car
insurance
- Analyze the factors affecting the process of claim settlement in Car
insurance at Bao Viet Insurance Corporation
- Propose some methods to improve risk management at BaoViet Insurance
Corporation, aiming at Car insurance market focusing on service quality and
effectiveness
1.1.2. Research subjects


- The factors affecting the process of claim settlement in Car insurance
1.1.3. Research scope
- The work of compensation and inspection and the factors affecting the claim
inspection of Car insurance at Bao Viet Insurance Corporation during 20122016
1.2. Research Methods
- The thesis uses qualitative research methods, methods of investigation,
methods of analysis and statistics
- The thesis uses two sources of database:

+ Secondary data: Collected from reports, documents widely published by
the Vietnam Insurance Association (VIA), Insurance Management and
Supervision Department, Baoviet Financial Report
+ Primary data: Collected from surveys, inspections with
 The subjects who:
 Customers have purchased Bao Viet insurance and have used
Bao Viet's claim inspection service
 Claim adjusters, Claim managers
 Executives and leaders of Bao Viet‟s business units
 Survey duration: 01 month
 Survey scope
 100 customers
 10 Claim adjusters, 5 claim managers
 10 sales executives, 5 sales manager
Collect data

Process and analyze data

Secondary data

Qualitative research methods
Method of preminary interview
Survey method
Record statistics using Microsoft Excel

Primary data
1.3.

Research process

Theoretic
basis

Proposal and
research model

Preliminary study: Interview and gather
information on inspection and claim of
Car in Baoviet


Set up calibration using questionaire
Official study: Data collection
using survey method with
questionnaire

Synthesize, process, analyze data

Analyze and evaluate:
- Factors affecting the claim management
operation of Car
- Propose solutions and improve

CHAPTER II: CAR INSURANCE PRODUCT AND CLAIM MANAGEMENT
OPERATION IN CAR INSURANCE IN BAO VIET INSURANCE (2012 – 2016)
2.1. Introduction of Bao Viet Insurance
2.1.1. Bao Viet Insurance – History and Development
BaoViet Insurance Corporation (BaoViet Insurance) is a member company
invested 100% by Bao Viet Holdings.
Over the course of nearly half a century of establishment and development

(from January 15, 1965 to present), Bao Viet Insurance is proud to be the most
long-standing insurance company in Vietnam, always affirming its leading position
in market share, original premium revenue and charter capital. BaoViet Insurance
has made great efforts to perform well the role and responsibility of the leading
insurer in Vietnam in supporting and settling claims for customers as well as in
social security in order to ensure sustainable development and contribute to
improving the quality of life for the community
History of formation and development:
 1964: Vietnam Insurance Company was established under Decision 179/CP
of the Government dated 17 December 1964


 1965: Officially entered into non-life insurance business with headquarter in
Hanoi and branch in Haiphong on 15/01/1965.
 1965 - 1974: Served a small group of customers who are State economic
entities operating in the field of import - export and ship in the North.
 1975-1982: The biggest and only state-owned insurer in Vietnam with
extensive network and diversified insurance products such as aviation
insurance, human insurance, Car insurance, insurance of river ships - fishing
vessels
 1989: Developed into Vietnam Insurance Corporation under Decision No.
27-TCQĐ-TCCB issued by the Ministry of Finance on February 17, 1989
 1996: Ranked as "Specialized State-owned Enterprise", one of the 25
largest state-owned enterprises in Vietnam
 1996-2007: During this period, Bao Viet continued to diversify and improve
the quality of products and services with the slogan "Best serving the
customers for development".
 2007: Vietnam Insurance Corporation was renamed Bao Viet Insurance
Corporation (Bao Viet Insurance) with slogan "Your trust, our
commitment”

 2013: Bao Viet Insurance increased its chartered capital from VND1,800
billion to VND2,000 billion, becoming the leading company in terms of
chartered capital in non-life insurance sector in Vietnam
With a network of 79 member companies and more than 300 business
offices serving customers nationwide, more than 3,000 highly qualified staff,
strong financial strength, diversified and superior products, good capacity of
business management, risk management and claim settlement, Bao Viet Insurance
is confident about its ability to advise and meet all insurance requirements of its
individual customers and enterprise customers.
Over the years, BaoViet Insurance is one of the pioneers in deploying
business model in the direction of centralized management, diversification of
products and distribution channels, promoting the risk management and
construction of advanced information technology system.
Bao Viet Insurance always strives for the core values of product quality
(high quality standard), approach (close, friendly and professional), cooperation
spirit (sustainable relationship with customers and partners based on mutual


understanding) with the spirit (honesty, transparency, accountability to the
community and standard in corporate governance)
2.1.2. Organizational Structure
Bao Viet Insurance Corporation is a member company, 100% invested by
Baoviet Group, organized according to the following diagram:
Bao Viet Insurance
Corporation
Chairman of
Member Board

Figure 2.1. Organization of BaoViet Insurance
Source: BAOVIET INSURANCE

Functions of each department, division:
General Director: Carries out all the work of the Corporation, makes
business decisions for the Corporation (including 79 member companies)
throughout the territory of Vietnam. General Director‟s decision will be the final
decision to bring revenue and effectiveness for Bao Viet.
Chairman of the Members‟ Board: represents the shareholders of Bao Viet
Insurance together with General Director to make decisions to bring efficiency and
profit to the shareholders
Deputy General Directors: in charge of the following areas: Human
Resources, Internal Control, Accounting, Planning - Finance, Operations


(including Car division) .... Responsible for managing and planning reports in the
specialized area to submit to the General Director for approval
Divisions: heading as Directors, responsible for grasping their fields of
expertise to report to the Board of Directors in order to support the overall
management.
+ Planning - Finance Division: Plan policies on cash flow, revenue and
expenditure of premium and compensation as guidelines for member companies
and other divisions to implement.
+ Accounting division: Research and guide member companies and relevant
divisions about the accounting profession
+ Internal Control Division: Inspect, guide and warn member companies to
strictly comply with regulations and procedures of General Director and the law.
+ Car Division: Research and guide the promulgation of regulations,
processes and products on the type of Cars for the whole organization.
+ Claim – Inspection Division: Perform the function of damage inspection perform the compensation according to the hierarchy (300tr for operation of car,
20tr for operations such as health, property ...). Support member companies in case
of difficult and complicated cases. Together with other relevant divisions represent
the Corporation about the operation in case of disputes with customers

79 member companies
of Bao Viet Insurance
Corporation


Figure 2.2. Organization of BaoViet Insurance‘s Branch
Source: BAOVIET INSURANCE
Directors of member companies: Directly run the business of insurance
products issued by the Corporation in the areas of management to bring revenue to
Bao Viet, be responsible for the whole business of the company.
In-charge deputy directors: in charge of direct sales departments or indirect
departments to support the business of the company, reporting to the directors of
arising work to make the right decision according the market.
Indirect departments: run by department heads, in charge of specialized jobs
(accounting, operations, claim), support for the operation of the sales department.
+ General Accounting Department: Directly collect insurance premiums,
business expenses of the direct sales department. Report directly to the director and
the Accounting Division
+ Department of Operations: Research, support the issuance of products of
the Corporation to deploy, support departments to exploit and sell insurance
products in accordance with the regulations issued by the Corporation
+ Department of Claim - Inspection: Perform damage inspection, plan and
directly compensate for loss under VND300 million and over VND 20million (in
term of Car and human), under VND20 million (with other operations such as
Health, property). Coordinate with the sales department to serve customers best.


+ Direct Departments: Directly do insurance business, inspect and settle
claim for losses under VND20million (in term of Cars and human resources) . The

manager will manage the executive to coordinate with insurance agents in directly
offering, selling insurance products to each customer, complying with the
requirements in payment and insurance rules issued by the company and the
Corporation.
2.1.3. Business Activities and Result
Bao Viet Insurance Corporation is strongly developing during the period of
Vietnam‟s economic integration; the living standard of the people has been
improved and the insurance market in Vietnam has achieved a remarkable growth.
Bao Viet Insurance Corporation operates in the field of non-life insurance,
with insurance operations:
 Original insurance business:
 Property insurance
 Technical Insurance
 Liability insurance
 Mixed risk insurance
 Car insurance
 Marine insurance








Cargo insurance
Health insurance
Employee insurance
Satellite insurance
Petroleum insurance

International travel insurance
Reinsurance business

 Financial investment

Ever since its establishment, Bao Viet has always been focused on building
core values:
1. Quality: Meet the high quality standards in the activities and services
provided


2. Ease of Access: Intimate, friendly and professional; Take care colleagues
and customers
3. Spirit of cooperation: Cooperate, stick with colleagues in the Corporation;
Build strong relationships with customers and partners based on mutual
understanding
4. Dynamic: Always move forward, constantly grow; seize opportunities
and create new standards; Be ready to receive new ideas and initiatives
5. Accountability: Transparent and honest; show the sense of responsibility
to the community; Building standards in corporate governance
Under the slogan "Your trust, our commitment", Bao Viet always aims to
provide the superior insurance and financial services to clients. At the same time,
Bao Viet also attaches great importance to building a stable cooperation
relationship with customers. Over the past five years, Bao Viet has achieved
impressive results:
Unit: billion dong

Figure 2.3: Bao Viet’s financial indicators (2012 – 2016)

Source: Financial statements of Bao Viet
The financial indicators from 2012 to 2016 show the results of business of
Bao Viet through the years. Specifically, the original premium revenue increased
1.2 times (from VND 5,325 billion in 2012 to VND 6,565 billion in 2016),
bringing total assets up 1.5 times (from VND6,808 billion (2012) to VND10,331
billion (2016)), while equity also increased from VND1,919 billion to VND2,445
million or 1.3 times over five years (2012-2016).
Baoviet's indicators of revenue, assets and equity have been growing for the
past five years but the profit after tax has not been maintained. In the period of
2012 - 2014, Bao Viet's after tax profit decreased from 340 billion dong to 251
billion dong, then started to increase again from 2015 and reached 301 billion dong
in 2016. This affected the indicators of ROA and ROE of Bao Viet in the period
2012 - 2016

Figure 2.4: Indicators of business performance of Bao Viet
(2012 – 2016)
Source: Financial statements of Bao Viet
In the period of 2012 - 2015, Bao Viet is transforming its business model
under the plan of reorganizing insurance enterprises by the Ministry of Finance
from being dispersed to concentrated. According to the classification of the
restructuring plan of the Ministry of Finance, insurance enterprises are divided into
4 groups:


Specifically, Group 1 consists of insurance enterprises with their solvency
and non-life insurers operating in the original insurance business with profit for 2
consecutive years or more.
Group 2 consists of non-life insurance companies with their insolvency and
non-profitable original insurance business for two consecutive years.
Group 3 includes insurers with risk of insolvency.

And the last group includes insolvent insurers under special control.
With the evaluation criteria of Ministry of Finance, the requirement for Bao
Viet is to quickly transform the organizational model to meet the long-term and
sustainable development of the company in the market as well as in the customer's
heart. Bao Viet focuses on business efficiency, enhancing the role of management
to the performance of the whole company.
The business performance of Bao Viet in the period 2012 - 2016 was
strongly influenced by Vietnam economy in this period. In the period of 2012 2014, Vietnam was seriously affected by the global economic crisis of 2008-2009.
The insurance market in Vietnam also suffered difficulty with a growth rate
reduction from 18.5% (2011) to 12.6% (2012). The increasingly tough competition
in the market leaded the unhealthiness among insurers, such as reducing too much
premium to ensure business efficiency.
With these requirements, Bao Viet must achieve two goals in the period of
2012 - 2015, converting its business model towards concentration and maintaining
the top market growth rate.


Figure 2.5: Non-life insurance marketshare in Vietnam (2016)
Source: Insurance Supervision and Management Department
By the end of 2016, Bao Viet still leaded the insurance market with total revenue
of VND7,669 billion. This demonstrates the great efforts of Bao Viet to maintain
its growth and affirm its position in the Vietnamese market.


2.2. The Situation of Car Insurance Business at Bao Viet Insurance
of the Corporation, Car Insurance in Bao Viet has also grown steadily. Car
insurance revenue in Bao Viet's total original premium revenue always accounted
for the highest proportion and increased steadily over the years 2012 - 2016.
Unit: billion VND

Figure 2.6: The proportion of Car insurance revenue in total original
premium revenue of Bao Viet (2012-2016)
Source: Annual report of Bao Viet
This operation is gaining a large proportion, because Car Insurance is much
diversified, one of which is civil liability insurance, a mandatory product according
to state regulations. According to the National Traffic Safety Committee, in the
five years from 2012 to 2016, the number of cars in circulation increased 1.5 times
and the number of motorcycles increased 1.3 times in Vietnam. At the same time,
the understanding of the benefits and needs of car insurance of Vietnamese people
are increasing, so the revenue of this product remains the largest proportion in the
business of Bao Viet.


However, in order to achieve these successes, Baoviet has continuously
invested in the development of modern IT infrastructure (softwares InsureJ,
SumAccount ...) into the management model. At the same time, Bao Viet also has
improved the quality of insurance consultants/agents by organizing professional
training courses as well as selling skills and customer care. In parallel with these
activities, Bao Viet has expanded distribution channels such as online direct sales,
expanding the cooperation in bancassurance cross-selling
Like most insurers, Car Insurance is a key business of Bao Viet Insurance
Corporation, which has a great impact on the effectiveness of its insurance
business and the position of Bao Viet in the market.
2.2.1. Car Insurance Products and Distribution Channels of BaoViet
Insurance
2.2.1.1. Car Insurance Products of Bao Viet Insurance
At present, Bao Viet Insurance is the company with the most comprehensive and
diversified products of Car insurance. The main products of Bao Viet include:
a. Car material insurance
Table 2.1 : Bao Viet’s car insurance program

No

Advanced package

3
4

Car material insurance (Car insurance, car shell
insurance)
Accident insurance of driver and passenger
Extended terms and condition
- Voluntary civil liability insurance
(up to 10 billion VND /person /case);
- Repair at optional garage
- Theft part insurance;
- Non-deductible new replacement insurance
- Car usage interruption insurance;
- Insurance of accidents outside the territory of
Vietnam (China, Laos, Cambodia, Thailand)

Ordinary package

2

Civil liability of car owner

PROGRAM
Basic
package

1

PRODUCTS


Each product has it separate premium level
Table 2.2 : Car insurance premium of Bao Viet

CAR MATERIAL INSURANCE
Premium (year)
No

Group of vehicles/ Usage purpose

Premium rate (%)
on the face amount
Car
insurance
1,55
1,80
2,05
2,60
2,80
3,90

Car shell
insurance
2,55
2,80

3,05
4,60
4,60
5,90

1
Group of vehicles with the lowest loss rate
2
Freight car
3
Passenger car
4
Refrigerated car
5
Tractor
6
Taxi
Annex 02: Non-deductible new placement insurance
1
Car in use from 3 to 6 years/Remaining value from 50% to70%
1,78
a
Group of cars with the smallest ratio of loss
2,07
b
Cargo trucks
2,36
c
Passenger car
2,99

d
Cold freight car
3,22
e
Tractors
4,49
f
Taxi
2
Car in use over 6 years to 20 years/ Remaining value under 50%
2,05
a
Group of cars with the smallest ratio of loss
2,38
b
Cargo trucks
2,71
c
Passenger car
3,44
d
Cold freight car
3,70
e
Tractors
5,16
f
Taxi
Annex 04: Repair of accidental cars at optional garage
Premium: Increase from 5% - 20% of annual premium or premium at annex 02

(Depending on the quality of selected garage)

2,93
3,22
3,51
5,29
5,29
6,79
3,37
3,70
4,03
6,08
6,08
7,80

ACCIDENT INSURANCE FOR HUMAN BASED ON CAR SEATS
Face amount/person/case
Premium (year)
STT
Face amount in VND (đ)
0,10% x face amount
1
From 5.000.000 đ to 200.000.000 đ
Face amount in USD ($)
2
From 5.000 $ to 10.000 $
0,10% x face amount
Over 10.000 $ to 30.000 $
0,15% x face amount

Over 30.000 $ to 50.000 $
0,30% x face amount
OWNER’S CIVIL LIABILITY INSURANCE TO CARGOES
Insurance liability level
(Insurance liability level /case = Insurance liability level
/ton * Car gross tonnage)

Premium (year)

From 10.000.000 đ/ton to 100.000.000 đ/ton

0,55% * Insurance
liability level

Source: Car premium schedule of Bao Viet
Bao Viet also applies a number of incentive programs for customers in the renewal year without any
complaints:
- 01 year with no claim arising: 10% discount on car material insurance.
- 02 consecutive years with no claim: 20% discount on car material insurance.
- 03 consecutive years or more with no claim: 30% discount on car material insurance.

In addition, Bao Viet also applies preferential premium for long-term customers;
offers premium discount for many insured vehicles when the customers apply
compensation level with deduction as follows:
Table 2.3: Discount rate of car material premium with deductible level

Annex 05: Insurance with deductible level
Deductible level (VNĐ)
Discount rate

1.000.000
3%
2.000.000
5%
4.000.000
8%
6.000.000
11%
8.000.000
14%
10.000.000
17%
12.000.000
20%
14.000.000
23%
16.000.000
26%
18.000.000
30%
20.000.000
35%
Source: Premium Schedule of Car insurance of
Bao Viet

Car material insurance covers all car material or only car-shell
- Total material insurance: Bao Viet compensates for damages caused by:
sudden accidents beyond the control of the owner (collision, overthrow, fall, sunk,

fire, explosion, collisions by other objects falling), force majeure accidents caused
by nature such as storm, flood, landslide, lightning strike, earthquake, hail and
tsunami) and damages due to theft and robbery of the whole car.
In addition, Bao Viet also pays for all costs incurred to prevent, limit loss,
protect and bring the damaged vehicle to the nearest repair place and inspect the
damages.
Premium of Bao Viet will not cover the losses caused by the following
causes, unless otherwise stated in the policy:
+ Intentional action causing damages to the damaged person.
+ Vehicles participating in traffic without accreditation certificate; drivers
having no valid driver's license
+ Racing
+ Indirect consequential damages
+ Accidents occurring outside Vietnam;
+ Vehicles carrying illegal inflammables and explosives;
+ Vehicles of 30 % overload or number of seats
+ War.
+ Wear, damage due to use, aging, devaluation ...
+ Electrical damage
+ Electricity damage or motor damage caused by vehicles running in
flooded areas.
+ Losses on tires.
+ Stolen vehicle parts
+ Loss below 500,000 VND.
- Car shell insurance: Cover physical damages of the body, shell ie whole
cabin, luminaire, capo, fenders, whole door and glass, all lamps and mirrors, wiper,
glass, whole metal, plastic or wood-made shell ... (total body shell)
- Extended terms in car insurance:
 Non-deductible new replacement insurance: Materials and spare parts in
the scope of insurance is newly-replaced with no deduction cost (or

depreciation)


 Car usage interruption insurance: Car rent is paid if the vehicle has been
temporarily detained or repaired due to accidents in the insurance coverage,
but not exceeding 30 days
 Repair insurance at optional garage: The car owner has the right to fix the
car at the garage agreed in advance at the time of signing the policy. This
clause only applies to new vehicles used within 5 years from the year of
manufacture and participating in car insurance in Baoviet
Deductible franchise insurance: When damage occurs under the policy,
the compensation shall be based on the following principle
Vehicle damage below deductible: On owner‟s account
Vehicle damage over deductible: Claim payment amount = Damage Deductible
 Damages occurring outside the territory of Vietnam: Vehicles are
compensated in case of accidents happening in China, Laos, Cambodia,
Thailand.
 Indemnity insurance by the limit of liability: The vehicle is insured at a
lower price than the actual value; the residual value of the vehicle is selfinsured by car owner. When the loss is within the insurance coverage, the
vehicle owner shall be compensated as the insured vehicle according to the
actual value (for the partial loss) and compensation shall be made according
to the face amount (for the total loss).
 Theft part insurance: The vehicle owner is compensated for theft parts in
accordance with the following conditions:
01 time for each part for 1 year policies
02 times for each part for more than one year policies
With non-deductible of VND2 million/case (Damage value over VND2
million will be paid in full)
 Flooded automobile insurance: Car with broken engine or electrical
damage due to accidental mistake of drivers driving it into the submerged

area will be compensated if the vehicle is covered by car material insurance
(not applicable to body shell insurance - part insurance). In cases where the
flooded vehicle dies or stops working, the driver starts the engine again
which causes damage, it will not be compensated.
- Special extended insurance cases
 Insurance for officially unlicensed vehicles: Apply for new vehicles,
vehicles only licensed for short-term circulation or extended for the period
before being licensed.
 Insurance for driving-school vehicles: The condition for compensation is
that the vehicle must have an auxiliary brake and an assistant driver (with a
valid driver's license) accompanied by a learner driver when driving on the
road
 Insurance for duty-free vehicles: In the event of an accident, the vehicle
owner shall be compensated according to the price of the domestic material
 Insurance for unlicensed vehicles for traffic circulation: Applicable to
motorized vehicles operating only within the construction site, agro-forestry
or mining area. But when the vehicle circulates on the internal road, it may
still be crashed or cause accident to others
b. Compulsory civil liability insurance for car owners: Cover physical, life and
property damages to a third party caused by the car owner; Accident insurance
for driver and passengers; Cover physical damages to drivers and passengers
on the road
c. Car Owner's Civil Liability Insurance for Cargoes:
Bao Viet will pay the car owner the paid amount of money in accordance
with Civil Code for damages to cargoes in the case of collision, overthrow, fall;
sinks, fires, explosion and/or other objects„s fall and collision; natural disasters
like: storms, floods, landslides, earthquakes, hail, tsunami.
In addition, Bao Viet also pays the car owners necessary and reasonable

expenses of: preventing and mitigating loss; preservating, loading, unloading,
storing, warehousing of cargoes due to accident.


d. Voluntary civil liability insurance of car owner
It is the same product as compulsory civil liability insurance in accordance
with the regulations of the State, but the limit of liability is enhanced:
Table 2.4: Voluntary civil liability insurance of car owner
Compensation for
property damage

Compensation for
human damage

Compulsory civil liability
insurance

100 million

100 million/person/case

Voluntary civil liability
insurance

100 million compulsory +
registered liability
insurance limit

100 million compulsory +
registered liability

insurance limit

Source: Premium Schedule of Car insurance of
Bao Viet

e. Passenger accident insurance: Cover physical damages to the driver and the
passengers while sitting in the car, getting on and off the vehicle in the process
of vehicle participating in traffic.
2.2.1.2. Distribution Channels of BaoViet Insurance with car insurance
Currently, Bao Viet distributes Cars through 5 main channels:
Distribution channels
of Bao Viet

Indirect

Direct

Head
Office

BAOVIET
INSURANC
E „s Branchs

Biddin
g

Agent

Broker

Bancass


Figure 2.7 : BAOVIET INSURANCE „s Distribution channels

I. Direct channel ( 30% of total revenue )
Bao Viet‟s business units directly find and sign policies with customers without
having to go through retail channels. This approach is usually implemented with
large insurance policies and traditional counterparts, but this approach is gradually
decreasing due to the strong development of advanced distribution channels such
as brokerage and regulatory requirement on bidding for highly-valued or State
capital insurance policies.
- Biding :
According to the provisions of Article 23 and Article 24 of Decree No.
123/2011/NĐ-CP, Bao Viet applies the form of bidding to the investors of projects
funded with 30% or more state capital, owner, or using state-owned assets and of
state-owned enterprises when participating in Car property insurance with two
modes of bidding:
- In case of premium under VND 3 billion, customers shall conduct bidding
to select insurance enterprises or appoint contractors if they fully satisfy the
conditions prescribed in the bidding law.
- In case of premium of VND3 billion or more, customers shall apply the
form of open bidding if satisfying the conditions prescribed in the bidding law.
II. InDirect channel (70% of total revenue )
a. Agent :
- Individual agent (30% )
This is the traditional distribution channel that Bao Viet provides insurance
products through individuals who sign agency contracts with the company.
Individual agents will carry out the following activities on behalf of Bao Viet:

introducing, offering, arranging the policies, fee collection and other activities


related to the distribution of insurance products in accordance with regulations of
Bao Viet.
-

Organizational agent ( 20% )

Organizational agent is also the traditional distribution channel of Bao Viet.
But instead of signing contracts with individuals, Bao Viet will cooperate with the
showrooms, garage to distribute insurance products in large quantities to the
customers of the garage. Organizational agents will be discounted by Bao Viet for
a commission fee as stipulated in the contract of cooperation.
b. Broker ( 14% )
Bao Viet establishes and maintains partnerships with leading brokerage
firms in Vietnam such as Marsh, Aon, JLT, Gras Savoye Willis, ... to launch largevalue Car insurance contracts.
c. Bancassurance ( 6% )
This is a new and very potential distribution channel for the insurance
market in Vietnam. Currently, Bao Viet has signed cooperation agreements with
major banks in Vietnam such as HSBC, Vietcombank, MaritimeBank,
Techcombank, HDBank ... to distribute Car insurance products, reach the potential
retail market as bank customers.
 Bao Viet now mainly distributes Car insurance through indirect channels,
which is in line with the universal trend of Vietnam Insurance market as well
as in the world when insurance companies' personnel will switch to care for
the distribution channels with efficiency and quality of service instead of
directly looking for customers and taking care quality as before.
New distribution channels such as Bancassurance or Brokerage have been
present in Vietnam, but recently they have grown strongly, showing great

potential and increasing specialization when connecting between insurers
and insurance buyers.