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Public property insurance

On July 18th 2015, in Hue, Insurance Supervisory Authority – Ministry of Finance has cooperated with Public property Management Department to organize Seminar on “Public property insurance: Mobilizing resources from insurance market to contribute to protection of State finance and budget”.

Natural catastrophe is more and more intense

At the seminar, Mr. Phung Ngoc Khanh, Director of Insurance Supervisory Authority – Ministry of Finance, emphasized that, with value of nearly 1 million billion dong (excluding infrastructure construction, property of armed forces, State enterprises), public property spreads across the nation, belong to all economic-socio fields and are currently being used and managed by nearly 90,000 offices, organizations and units.

Public property have an important role for State agencies, organizations and units to perform their functions and duties and have direct impact on socio-economic stability from education, healthcare, irrigation, public service to transportation, communication, etc.

According to Mr. Phung Ngoc Khanh, during the management and use of public property, objective risks such as nat cat risk, technical risk, man-made risk, etc. are unavoidable and it is necessary to have financial sources to overcome damages of public property caused by these risks.

In the world, many countries must buy public property insurance such as Philippines, Panama, Peru, Mexico, etc., insured objects are buildings, infrastructure, etc., when the risk occurs, agencies, organizations, units that use and manage public property are not only insured by insurers with strong financial capacity but also by leading, reputable and experienced reinsurers in the world. Otherwise, without public property insurance, the Government will have to pay hundreds of billion US dollar to overcome the damage of natural catastrophe.

Currently, rate of insured public property is still very low (nearly 1% of agencies, organizations, units that use and manage public property buy insurance), scope of insurance is not comprehensive yet, nat cat risk is not insured.

According to the latest study by the Asia Foundation and the Institute of Meteorology, Hydrology and Environment (Ministry of Natural Resources and Environment), over the last 10 years, Vietnam is among 5 countries with highest natural catastrophe risk. Each year, natural catastrophe kills about 500 people on average, causing damage of VND14,500 billion, which is equivalent to 1.2 – 1.5% of GDP.

Public property insurance is the solution to ensure safety for public property

Speaking at the seminar, the participants emphasized the need for insurance of public property, because this is the best method to minimize risks when disasters occur, at that time, assets will be insured by insurers and reinsurers.   Public property insurance contributes to the financial protection, reduce of the budget deficit; is consistent with international practice, etc.

Many countries around the world have been implementing policies for public property insurance to protect the system of infrastructure for risk prevention and response to natural disasters and investing in recovery, reconstruction after the disaster to further attract foreign direct investment (FDI).

At the seminar, representatives of the insurers said that public property are largely invested increasingly, while disaster events are increasingly fierce … The deployment of public property insurance is extremely necessary. Insurers fully have enough capacity to deploy this insurance product.

Regarding the important role of public property insurance for our country today, Director of the Department of Public Property Management, Mr. Tran Duc Thang said that State property spreading across the country have a very important role in society, so it is time to put the public property insurance into law.

Sharing in the seminar experts said: Awareness of public property insurance is increasingly enhanced, in addition to the growing insurance market, the financial capacity of insurance companies is increasingly strengthened, these are the necessary and sufficient conditions for deployment of public property insurance.

For closing remarks, Mr. Phung Ngoc Khanh said that the Insurance Supervisory Authority and insurers are willing to make claim payments timely, fully with highest limit for any public property damaged by any risk in order to quickly restore the value, reconstruct completely public property, ensure that the State, organizations, units perform their functions and duties in an effective, efficient and clear manner. 

(According to Financial Review)

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