Risk management rising in Vietnam but insurance market needs to communicate more: Thu Ly

Ms Ly said that, in her view, Parima is a great place for risk and insurance managers to gather and share knowledge, network and learn from each other. “Among peers, we know where we are and what we need to do to continuously improve our work,” she said. Ms Ly’s company already has an ERM system in place. This system gives managers at VinGroup confidence that they are balancing risk and opportunity, and measuring risks intelligently and systematically rather than simply avoiding them, she explained. “A formal risk and insurance function can improve the trust and communication across the company where people get buy in and understand what risk and insurance means, what are their roles and the risk manager’s roles. Once it’s clear, people participate and engage. A formal system also can help improve the risk culture and maturity from time to time until, one day, it is ready to run smoothly,” said Ms Ly.hideAsked how mature risk management is in Vietnam, Ms Ly said that it clearly has some way to go. “If I score on a basis of 1-10, from lowest to highest, I think Vietnam is about 4, below average. We only have Parima Vietnam as a risk and insurance association for risk and insurance practitioners. Across Vietnam, we have about 10 true risk managers who are local Vietnamese people, mainly working for banks. For the non-financial services sector, I think there are around five in the total of 90 million Vietnamese people,” she explained. Ms Ly estimates that in the financial services sector about 20% of companies have a formal risk management officer and function in place. For non-financial services the proportion is probably more like 10%, she added. “In order to raise the proportion, it could be from many factors. For example, regulators can request all publicly-traded companies must have an ERM framework, investors request the investee companies must install ERM before they invest. The organisations by themselves should voluntarily implement ERM as they see that it’s essential and could bring benefits to the company particularly for high-risk industries such as oil and gas, insurance, asset management, bank, mining, aviation and real estate industries,” said Ms Ly. The key skills needed by risk managers in Ms Ly’s view are technical but they also need soft skills. “They need to know the ERM standard or framework in order to implement the ERM system. They need to be an expert in their field. Next could be soft skills (communication, training, presentation). How they communicate to the people to help them understand and engage from top down to bottom up,” she added. Asked whether she believes there is adequate business insurance capacity for corporate risks in Vietnam and the wider region currently, Ms Ly thinks not. But she also believes that a more mature approach to insurance management needs to be taken by customers in the region. “I think Vietnam is still a country with low insurance capacity. It means that not many companies lack a robust risk financing programme because they don’t have an ERM system in place. Also Vietnamese companies don’t want to spend money to buy insurance policies because of budget constraints. On a regional level, insurance capacity is still fragmented and sold in silos because of the different level of development among the countries in the region,” she explained. Ms Ly was asked if the coverage available is fairly priced and what she believes is the outlook for pricing and capacity. She said that pricing would be more accurate and fair if the brokers worked for and were paid by their customers rather than the insurers. “For pricing, I think the insurance industry should consider to change the model so that the broker takes the commission and fee from the client to help the client to negotiate terms with insurers. With this way, pricing would be much better than the current system whereby the broker gets commission from insurers. Also, clients should feel free to engage with insurers to seek advice on their risk financing programme so that they know what types of risks can be shared with insurers,” she said. Ms Ly also said that she believes that brokers need to work harder to deliver more consistent coverage from the market and help avoid coverage gaps. “I personally think that brokers need to improve in this area as they deal with insurers and to make sure that there is not a big gap between insurers for coverage and deductions,” said Ms Ly. As to specific coverage areas, Ms Ly said that cyber is still a new form of cover in Vietnam and the wider region and still a ‘challenge’ for both clients, insurers and brokers to work out an appropriate insurance policy with adequate coverage. Supply chain coverage has improved and most of the time customers rely on advice from brokers and insurers in these complex areas, she said. To improve coverage in such tricky areas, insurers need to listen to clients more. “They need to spend more time with customers, work out many alternatives and then provide them with the most suitable terms and coverage. In reality, communication is poor between clients and insurers—that needs to be improved,” explained Ms Ly.

Risk management rising in Vietnam but insurance market needs to communicate more: Thu Ly

Want to read this article?

Read Next

International SOS warns of ‘burnout epidemic’

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

International SOS warns of ‘burnout epidemic’

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

Want to read this article?

Read Next

International SOS warns of ‘burnout epidemic’

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

Related Articles