Customers are waiting for the product liability insurer

Although there are many manufacturers want to buy product liability insurance for their products in order to increase confidence for customers - an effective marketing tool. However, few companies can afford insurance and the courage to offer this product.

Revenue from product liability insurance is still very modest, only about 1% of total revenue, which is the result of DTCK survey at some enterprises which have deployed those products. Across the market, within no adequate statistics, but, a whole array of general liability insurance accounts for only about 2% of the total premium of the market for non-life insurance and compensation percentage is below 10%. There is only one exception of an insurance company on the top that has the percentage of compensation up to 84% in the first quarter of 2014.

Talk about paradoxes for more supply for product liability insurance, represent of a certain insurance company said the non-life insurance product liability is a fairly complex product in terms of the fees and compensation. People in this field specializes this product as “long-tail” product since the inception of customer events can occur long after they buy the product. Meanwhile, insurance companies still have to be responsible; therefore, the risk is very high.

As insurance for products of many large enterprises such as Shell Gas, Big C and Lotte Mart, representative of Vietnamese Insurance said that in recent years, the sense of responsibility to buy product liability insurance were also popular more and variable for the manufacturing enterprise and supply products in countries where there is risk of damage to third parties such as gas processing, pharmaceutical, cosmetics …

However, this representative also confirmed that product liability insurance is popular in developed countries due to mandatory provisions of law, by the consciousness and the demand from major consumer of products and the responsibility for the supplier’s products, but this is a complex type of coverage which may be related to the legal provisions on consumer protection not only in Vietnam but also other countries where the product is consumed. Therefore, this type of coverage should be provided by large insurance companies that have the capacity and experience in the insurance market of Vietnam.

Of course, between theory and reality, there has always been a long road, but in the context that economic still has difficulties, the demand for property insurance, marine … are low, the product liability insurance may be an attractive segment.  Moreover, after the economic crisis, the non-life insurance sector is in the restructuring phase of insurance products, changing direction, instead of just focusing on premium products that generate higher revenues but customers increasingly diminished as difficulties.