FOREIGN TRADE UNIVERSITY

FACULTY OF ENGLISH FOR SPECIFIC PURPOSES

----------***----------

RESEARCH PAPER ESP 3

TOPIC: AN ANALYSIS OF HULL INSURANCE MARKET IN
VIETNAM: PROBLEMS AND SOLUTIONS

Author by: Group 11

Class: TAN432(2.2/2021)BS.2
Lecturer: M.A Phan Kim Thoa

Members of Group 11:

Nguyễn Ngọc Mai Anh 1814410013
Vũ Thị Ngọc Ánh 1814410018
Đào Thị Mỹ Duyên 1814410053
Phạm Khánh Linh 1811110357
Nguyễn Hồng Nhung 1814410168
Somchay Sengpathoummang 1710120342

Hanoi, June 2021

 MEMBERS OF GROUP 11
No. Full name
1 Somchay Sengpathoummang
2 Nguyễn Ngọc Mai Anh
3 Đào Thị Mỹ Duyên
4 Vũ Thị Ngọc Ánh
5 Phạm Khánh Linh
Nguyễn Hồng Nhung
6 1814410168
(Leader)
Student ID Task
Abstract, Introduction,
Chapter 1:
1710120342
1.1. History of formation and
development
Chapter 1:
1814410013 1.2. The fundamental
contents of Hull Insurance
Chapter 1:
1814410053 1.3. Hull Insurance in
Vietnam
Chapter 2:
2.1. History of formation the
1814410018 Hull Insurance in Vietnam
2.2. Overview of Hull
Insurance market in Vietnam
Chapter 2:
2.3. An evaluation of Hull
1811110357
Insurance market in Vietnam
2.4. Development trends
Chapter 3: Solutions for
sustainable development of
Hull Insurance market in
Vietnam, Conclusion
 TABLE OF CONTENTS
ABSTRACT ...............................................................................................................1
INTRODUCTION .....................................................................................................2
CHAPTER 1: THEORETICAL FRAMEWORK .................................................3
1.1. History of formation and development .........................................................3
1.1.1. Definition ...................................................................................................3
1.1.2. History of formation ..................................................................................3
1.1.3. The importance of Hull Insurance ...........................................................5
1.2. The fundamental contents of Hull Insurance...............................................6
1.2.1. The Subject-matter insured .......................................................................6
1.2.2. Types of Hull Insurance ............................................................................6
1.2.3. Hull Insurance Coverage ..........................................................................8
1.2.4. Scope of liability of the parties ..................................................................9
1.2.5. Hull Insurance value ...............................................................................11
1.2.6. Hull Insurance premium .........................................................................11
1.2.7. Disclosure of Hull Insurance ..................................................................12
1.3. Hull Insurance in Vietnam ...........................................................................13
1.3.1. Types of Hull Insurance ..........................................................................13
1.3.2. Hull Insurance contracts in Vietnam .....................................................13
CHAPTER 2: THE HULL INSURANCE MARKET IN VIETNAM ..............17
2.1. History of formation the Hull Insurance in Vietnam ................................17
2.2. Overview of Hull Insurance market in Vietnam .......................................17
2.2.1. The size of hull insurance market in Vietnam .......................................17
2.2.2. Structure of the hull insurance industry in the market .........................19
2.3. An evaluation of Hull Insurance market in Vietnam ................................21
2.3.1. Advantages ...............................................................................................21
2.3.2. Disadvantages ..........................................................................................22
2.4. Development trends ......................................................................................23
CHAPTER 3: SOLUTIONS FOR SUSTAINABLE DEVELOPMENT OF
HULL INSURANCE MARKET IN VIETNAM ..................................................25
3.1. Solutions for the Government......................................................................25
3.2. Solution for insurance companies ...............................................................25
3.3. Solutions for shipowners ..............................................................................27
CONCLUSION ........................................................................................................28
REFERENCES ........................................................................................................29
 TABLE OF FIGURES

Figure 2.1: Non-life insurance market share in 2020............................................... 18

Figure 2.2: Proportion of revenue by insurance business in 2020 ............................ 20
Figure 2.3: The proportion of types of ship in Vietnam in 2020 .............................. 22
 ABSTRACT
The paper is based on the research of Vietnam's hull insurance market data to
provide identities and analysis of this market situation with its importance and
development potential. Although the demand for hull insurance originating from the
domestic market is still low and the competitiveness of domestic enterprises
remains weak, more and more participation of commercial organizations as well as
export goods by sea freight with increasing volume is creating conditions for this
industry to grow. This analysis gives readers an overview of this market. It also
offers solutions and recommendations in the organization and management of
insurance enterprises as well as state support to facilitate the development of the
domestic hull insurance market. With an in-depth inquiry and thorough analysis of
this market, the solutions presented in this article are considered completely
feasible.
Keywords: Hull insurance, insurance market.

1
 INTRODUCTION
Regardless of the period, all economic sectors face random and abnormal
risks. Therefore, the insurance industry is considered a tool to offset damages and
losses of people and assets of the state and businesses. For a long time, the
insurance industry has been considered a shield of the economy. According to the
2018 figures, the insurance industry's total investment back to the economy was
estimated at 319,610 billion VND (an increase of 29.53% compared to the same
period last year).
The shipping and logistics industry is one of the strategic factors in the
development of national economics in Vietnam. In particular, sea freight is
considered the dominant method. With a large transport capacity and long transport
time, a vessel carrying cargo from one port to another may face a lot of risks such as
stranding, collision, fire, wet cargo due to storms, accidents and/or sickness of
crew…. These risks can cause other risks, leading to serious losses. The companies
that suffer the losses are affected. It may have to bear small losses making the
business and manufacturing interrupt while big losses can make the companies go
bankrupt totally.
Therefore, the advent of hull insurance is considered an essential industry to
help Ocean transportation companies/Owners of ships to keep calm and stabilize
finance after the loss. This contributes to the general development of the economy.
In comparison with other types of industries, hull insurance is still a young industry
in Vietnam but it has full potential to develop further. During the implementation of
insurance, there are still lots of challenges and difficulties that need more research.
For these reasons, it is imperative and urgent to study the situation and propose
solutions in hull insurance.
The paper analyzes the situation of hull insurance in Vietnam in three
chapters: Chapter I includes concepts together with some definitions used in the
study. Chapter II analyzes the hull insurance market in Vietnam. Chapter III
recommends solutions for the hull insurance market in Vietnam.

2
 CHAPTER 1: THEORETICAL FRAMEWORK
1.1. History of formation and development
1.1.1. Definition
Marine Hull Insurance offers protection to shipowners and other interested
parties against loss of or damage to ships and related financial losses suffered
including subsidiary interests, e.g., freight, disbursement, liabilities, and other allied
interests. Insurance relating to War Risks is also available. Insurance of On-shore &
Off-shore Oil & Energy related risks are also written in the Marine Hull
Department.
1.1.2. History of formation
First of all, in the 5th century BC, people sought a way to minimize total loss
of cargo shipment by dividing it into small ones. That was the way to disperse the
risks and loss and can be considered as the primary form of insurance. After that, in
order to face all serious losses, marine loan was appeared. It means that in the event
of loss of cargo during transit, the borrower will be exempt from repayment of both
the loan and interest. Conversely, they had to pay very high interest if their cargo
was safely arrived. It could be understood that the high interest was in fact an
insurance premium. However, the number of losses was increasing, making
creditors in a very dangerous situation. Instead of that, insurance appeared.
In the XIV century, the first marine insurance contracts appeared in Floren,
Genoa of Italy. Under those contracts, the insurer committed to compensate for
loss/damage concerning the property, which were suffered by the insured in the
event of loss at sea. Also, the insured had to pay an amount of premium to the
insurer. The oldest contract was found dated 22/04/1329, and still kept in Floren up
to now. Then, along with the discovery of Indian Ocean and America, the maritime
industry in general and marine insurance in particular had grown rapidly. In terms
of the legal basis, the law document Barcelona in 1435 was the first one of the
insurance industry, then Decree of Philippe de Bourgogne in 1458, Decrees of
Brugos in 1537, Fiville in 1552 and Amsterdam in 1558. In addition, there was the
Decree of Finland in 1563 concerning marine cargo insurance contracts. However,
it was not until XVI - XVII centuries that insurance activities strongly developed

3
and became more and more widespread in many areas of socio-economic life,
especially when capitalist production appeared. The opening point of that was the
Laws 1601 of the United Kingdom under Elisabeth Queen regime, then Royal
decree 1681 of France written by Colbert and issued by Louis XIV King. Those
were the very first laws for the marine insurance industry.
In the XVII century, the United Kingdom occupied the leading rank in trade
and international marine, and London was the most thriving center. All ships from
Asia, Europe, America, and Africa landed on the Thames river of London. Cafes
were the place where all traders, bank owners, transporters, insurers… met each
other, carried out all transactions, exchanged information and directly discussed
with each other. Edward Lloyd was a retired Captain. He opened his cafe in the
Great Tower of London in 1692. Traders, bank owners, transporters, insurers …
always came there to exchange information about ocean going vessels, cargo on
ships, safety and incidents on seas. Besides the café management, in 1696, Edward
Lloyd established a newspaper with all news about ships' situations, other matters to
provide information to his clients. However, his main duty was providing the place
for meetings and transactions for his clients. After Edward Lloyd’s death, there was
a need for a same place for marine insurers to gather to implement their
transactions. In 1770, Society of Lloyd’s as the volunteer organization was
established and it arranged a venue at Pope’s Head Alley for their members. Then it
moved to Royal Exchange and stayed there until 1828 when they moved to their
private house in Leaden Hall. That organization operated as a private organization
until 1871 when it was incorporated under laws of Parliament. It then became
Lloyd’s Committee and was the biggest insurance form and center of insurance in
the world. After marine insurance, fire insurance appeared. It was marked with a
serious fire in London, United Kingdom on 2/9/1666. There were 13,000 destroyed
houses including over 100 churches. The fire lasted within 04 days without any
rescue for damages. Then, all businessmen came up with the idea of sharing the fire
risks with establishment of Fire insurance companies such as: " Fire Office" (in
1667), "Friendly Society" (in 1684), "Hand and Hand" (in 1696), "LomBard House"
(in 1704) …. At that time, Lloyd’s Insurance company was established and

4
specialized in marine only. It was not until the XX century that Lloyd’s switched to
both domestic insurance and reinsurance. Under the effect of fire in London, in
1786 the first Fire Insurance company was appeared in France named Company
L'assurance Centree L'incendie and Company Royade (in 1788). The event worthy
to pass through generations at that time and in the history of insurance was the
mathematical work of Pascal about "Geometry of Insurance '' (Geometric Du
Hasard) in 1654. It was a mathematical probability. It was a statistical basis for
serving insurance activities. Up to now, it has been the basic technique of insurance.
There are no documents to show exactly when hull insurance first appeared in
Viet Nam. It was conjectured in 1880 when foreign insurers from England, France,
Switzerland, and USA… paid attention to Indochina. They opened their insurance
representative offices in Vietnam as trade companies. In 1926, the first branch of
Franco – Asiatique Company was opened.
In 1929, the first Vietnam Insurance Company was opened with a Head Office
located in Saigon. However, it specialized in car insurance. From 1952, insurance
activities were expanded with multi types and transactions with the operations of
both domestic and foreign insurers.
On 15/01/1965 Vietnam Insurance Company (As Bao Viet) started their
official operation in the North of Vietnam. In the early years, Bao Viet was
specialized in marine insurance such as import-export cargo, ocean going
vessels. At the beginning, ship insurance belonged to marine insurance. With the
increase of quality and quantity, the revenue was increased accordingly. Under the
requirements of management, some big insurance companies such as Bao Viet, PVI,
PJICO, and Baominh have divided marine insurance into marine cargo insurance
and hull insurance.
1.1.3. The importance of Hull Insurance
Hull insurance plays an important role in sea freight, for many reasons as
follows:
Firstly, ships with large tonnage and capacity, long operating time, are
vulnerable to natural disasters such as storms, tsunamis, volcanoes and accidents at
sea like stranding, collision, fire, wet cargo due to storms, accidents and/or sickness

5
of crew… and value’s vessels is extremely high. If these events occur, the
shipowners will face many losses.
Secondly, although modern vessels are equipped with many advanced
facilities, there will be some unexpected situations beyond the control of the
shipowner which can lead to significant damages.
Finally, it is dramatically easy for a ship's operation at sea to cause damage to
other ships and the shipowner must be responsible for such losses. The value of the
hull is increasing day by day, which leads to huge financial risks that the shipowner
cannot overcome. In the past, the value of the ship was only in the hundreds of
thousands of dollars, today, the value of the ships is up to hundreds of millions of
dollars. The shipowner cannot deal with the consequences on his own if the ship
suffers a great loss, especially a total loss.
Hull insurance encompasses not only tangible (vessels) but also intangible
(part of the shipowner's civil liability). As a result, it helps protect assets, stabilize
people's lives and bring safety to society. The activity of hull insurance is not only
necessary for the shipowner himself, but it also ensures the financial safety of the
goods owner and contributes to ensuring the stability of maritime and commercial
activities in particular and stability determine life and production for the community
in general.
1.2. The fundamental contents of Hull Insurance
1.2.1. The Subject-matter insured
The Subject-matter insured in hull insurance is the hull, machinery and
equipment, operating freight and part of the liability in the collision of ships
(usually 3/4 of the collision liability).
1.2.2. Types of Hull Insurance
 Hull Time Insurance
Hull Time Insurance is hull insurance for a certain period of time. This type of
insurance is usually applied to most types of ships. The term of insurance in this
form is usually 12 months or less and must be clearly stated in the contract. The
start and end dates of this insurance must be clearly stated. This insurance is usually

6
applied to different types of ships: merchant ships (usually 100 GRT or more), ships
under 100 GRT, fishing boats, special ships, etc.
 Voyage Insurance
Voyage Insurance is the insurance of the ship from one port to another or
insurance for a round trip. This insurance is usually used for ships newly built for
export or ships undergoing repair, under the following conditions: Institute Voyage
Clauses (IVC) -“All Risks” and IVC-FPA abs. (separate loss exemption).
 Hull Disbursements Insurance
Hull Disbursements Insurance is a type of insurance for the expenses of a ship
during a voyage (equipment, supply items, advance wages for sailor officers).
Under this type of insurance, the insurer will indemnify the shipowner for the loss
of expenses when the insured vessel is completely lost, however, to be
compensated, the shipowner must prove the actual amount of costs lost. This is not
usually possible for the owner to do in most cases, so in practice it is customary to
ascribe a certain percentage to the value of the insured vessel without regard to the
actual costs incurred, in this case, the percentage does not exceed 25%.
 Port Risks Insurance
Port Risk Insurance is the type of insurance against the risks that occur to the
ship when it is moored at a port or somewhere due to the stagnation in the shipping
industry, or due to the decision of the shipowner. The ordinary time insurance is
shorter compared to other types of insurance, usually 12 months or less.
 Builder’s Risk Insurance
The insurance buyers are shipbuilders, insuring the ship from the beginning of
construction until its completion, not only insuring the physical body of the ship,
but also for other problems such as: production interruption insurance, expected
interest insurance, noise insurance, etc.
 Repairing Risks Insurance
The insurance buyer is the shipowner to cover the risks arising during the
repair of the ship that are not covered in the hull term insurance policy.
 Repairing Expenses Insurance
Insurance for expenses incurred during ship repair.

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1.2.3. Hull Insurance Coverage
According to the characteristics of business activities, Marine Hull Insurance
provides coverage for the following risks:
1.2.3.1. The main risks
These are the risks that were insured right from the earliest days of marine
insurance. Those risks often cause major losses, include:
 Stranding: Is the phenomenon that the bottom of the ship is close to the seabed
or lies on another obstacle that makes the ship unable to run and often requires
external forces to emerge or escape from aground. Stranding must satisfy the
condition that it is an abnormal phenomenon.
 Sink: It is a phenomenon where the ship completely sinks into the water, the
bottom of the ship touches the seabed, cannot run and the journey is
terminated.
 Fire: A heating reaction due to an objective cause such as lightning strikes or
human negligence. The fire must be such that the ship's voyage is totally
interrupted but only partially damaged.
 Collision: Collision means the transport tools collide with other moving or
fixed objects .
1.2.3.2. The ordinary risks
This is a group of risks that expanded after the early days of marine insurance
and is commonly known as insured risks. This group of risks includes the following
risks:
 Illegal acts of the master and crew who are not co-owners of the ship.
 Illegal conduct includes deceitful or deceptive acts committed by the master or
crew against the ship to the detriment of the owner. Therefore, between the
insurer and the insured, there should be an agreement to indemnify the loss
caused by the illegal act or fault of the shipowner and their agent.
 Missing: If the vessel fails to arrive at the named port and, after a reasonable
period of time has not received word about it, the ship is considered to be
missing. The reasonable time depends on the type of ship, the type of cargo,
the nature of the journey and the different long and short distances.

8
1.2.3.3. Specific risks
A risk not covered by ordinary insurance unless the insurer accepts to
participate further. The premium for this risk is often very high. Separating it as a
specific risk also adds commercial significance to the insurer's attraction to
customers (because not all shipping routes are at risk). Specific risks in hull
insurance are risks of war, strikes, risks of nuclear radiation due to atomic bombs.
1.2.3.4. Excluded risks
In hull insurance, there are also risks that the insurer does not accept, called
excluded risks, including :
 Acts of negligence - a willful intent of the insured: This is a matter of principle
because the insurer and the insured also share an interest in the value of the
insured vessel.
 Delay of voyage: An extension of the journey time compared to the normal
voyage not due to the reason of rescue, but an accident leading to loss of the
ship.
 Vessel not seaworthy: A ship that does not have enough machinery and
equipment, officers, crew members, fuel and food reserves for the prescribed
voyage.
 Vessel going astray: A ship that goes out of order or goes outside the
prescribed sequence not for reasons of rescue, refuge or risk avoidance.
1.2.4. Scope of liability of the parties
1.2.4.1. Liability of the Insured
The insured may be the owner of the ship or the merchant operating the vessel
under the term charter. Although the insured is not committed in the contract, but
according to international custom, the insured is responsible for ensuring that the
insured vessel meets the following implied warranties:
 Vessel is seaworthy within the validity period of the contract.
 Nationality of the vessel remains the same throughout the period of insurance:
The same nationality of the vessel means that the risk of adversaries or acts
of war nature does not change.

9
  The voyage of the ship must be lawful. During the effective period of the
insurance policy, there may arise orders to blockade, embargo, blockade or
restrain the goods. If the shipowner does not follow the above orders, it is
considered an illegal voyage.

In addition to the above responsibilities under the insurance contract, the

insured also has the following obligations:
 To fully declare the necessary conditions when making an insurance contract.
If, when making an insurance contract, there are not enough conditions to
declare all, then after the contract has been established, the insured must
declare it to the insurer immediately.
 Once the insurance contract has been signed, all measures must be taken to
prevent or limit development loss. The insurer has the right to refuse to
compensate for damage caused by the insured's failure to perform such an
obligation.
 When an accident occurs within the scope of responsibility of the insurance
policy, causing damage to the insured property, it must promptly notify the
insurer or the appointed assessor at the place of occurrence, in order to issue a
loss assessment report. An assessment record that is not made by an insurance
surveyor or an appointed assessment agent will not be valid as a basis for an
insurance claim settlement.
1.2.4.2. Liability of the Insurer
The insurer is responsible for insuring up to the maximum sum insured equal
to the value of the ship at the time of insurance. In addition to ensuring business for
the shipowner or operator, the insurer can receive additional:
 Collectable freight insurance
 Operating expenses, excess profit of the ship within the control range (no
more than 25% of the hull insurance amount)
 Two additional sums insured, not exceeding 80% of the value of the ship
itself.
The insurer's liability for space and time is specified in the insurance contract.

10
  Time: Starting from 24 hours on the date of signing the contract and ending at
24 hours on the day the contract ends. If the ship is still at sea, the time will be
extended until the ship returns to the last port.
 Space: With the contract specifying "At and from the specified port", the
effect begins when the ship enters that port, even if the ship has not arrived at
this port at the time of signing the contract. When the ship arrives at the port, it
must be at a state of physical safety and if the change of itinerary is not
approved by the insurer, they have the right to discharge their liability.
1.2.5. Hull Insurance value
The value of hull insurance is the value of the subject-matter insured, it
includes the value of the hull, ship's engine, ship's equipment, supplies for a voyage,
advance wages for the ship, shipowner's income and insurance premiums. The value
of hull insurance is the basis for calculating insurance premiums when signing an
insurance contract, and is the basis for considering compensation when a loss
occurs. When indemnifying, the insurance company may have to additionally
compensate the shipowner for reasonable expenses such as salvage, inspection, loss
prevention and control costs, and costs of claims and proceedings under the
insurance company's responsibility.
1.2.6. Hull Insurance premium
The hull insurance premium is calculated on the basis of the premium rate set
by the insurance company, on the basis of the ship's annual loss statistics. The
premium rate depends on: ship type, ship size, ship age, purpose of use, business
area, insured value, insurance conditions, equipment, crew, deductible level, etc. In
short, it includes the following components: Basic fee and Surcharge
 Basic fee: This fee depends on the state of maintenance and repair, the route
and the range of the train. On the expertise of the captain and crew, on the
management ability and management ability and business skills of the owner,
on the loss of the fleet over the years.
 Surcharge: Surcharges include administrative costs, expenses for marketing
and advertising, expenses for prevention and control of losses, and expenses
for inflation that devalues the currency.

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1.2.7. Disclosure of Hull Insurance
The Insured must disclose to the Insurers within 14 days from the date on
which the Insured became aware of any change in the facts and circumstances
disclosed or represented on concluding this policy or in the subject-matter insured
that leads to a substantial alteration of the risk.
a) When such declaration is made the following shall apply:
- Where the alteration in the risk has not been caused by the Insured, this policy
shall remain in full force and effect, provided the Insured pays an additional
premium corresponding to the alteration in risk, as agreed by the Insurers.
- Where the alteration in the risk has been caused by the Insured, the Insurers shall
be entitled to either:
 Terminate this policy by notice in writing within fourteen (14) days from the
date on which they became aware of the change (in which case the premium
shall not be refunded).
 Require the payment of an additional premium corresponding to the alteration
in risk, as fixed by the Insurers.
b) When such declaration of the Insured is not made within 14 days, the following
shall apply:
- Where the Insured proves his good faith, the Insurers shall be liable to pay a
proportionately reduced indemnity, calculated in proportion to the premium that
was paid as compared to the premium that should have been paid had the correct
information been disclosed, unless the Insurers can prove that if they had known of
the true facts not disclosed or misrepresented they would not, in any event, have
agreed to underwrite this policy. In the latter case the Insurers shall be entitled to
terminate the contract at time of the alteration of the risk.
- Where the Insured does not prove his good faith, the contract is automatically
terminated at time of the alteration of the risk.
c) The Insured must disclose to the Insurers any new marine mortgage registered in
respect of the Insured Vessel during the currency of this policy. Any failure to
comply with this obligation shall entitle the Insurers to declare the insurance
contract null and void from inception as if the policy had never existed.

12
 Raising awareness of shipowners on claims and claims Shipowners should
have specialized officers in charge of insurance operations; pay attention to
seafarers to raise the crew's morale in ensuring the safety of the ship, such as
promptly resolving the situation when loss occurs; proactively collect information
from insurance companies and international associations about accidents that have
occurred. Raising the level of consciousness of seafarers A seafarer, in addition to
ensuring health conditions, must have professional knowledge, seaworthiness and
foreign language skills. To raise the sense of responsibility of seafarers, shipowners
need to have reasonable remuneration.
1.3. Hull Insurance in Vietnam
1.3.1. Types of Hull Insurance
 Hull insurance for ocean vessels operating in international maritime routes
 Hull insurance for ocean vessels operating in domestic maritime routes
 Hull insurance for river/coastal vessels
 Hull insurance for fishing boat
1.3.2. Hull Insurance contracts in Vietnam
(1) Underwriters: Insurance companies
(2) Insured: Shipowners/ Managers/ Charterers
(3) Subject-matter insured: hull of the insured vessel, machinery, equipment of the
insured vessel
(4) Terms and Conditions
 Institute Time Clause – Hulls 01/11/1995
 Other applicable insurance conditions in the international insurance industry
 Insurance conditions issued by the insurance company
Additional terms and conditions:
 Provisions for the exclusion of radioactive contamination, chemical,
biological, biochemical and electromagnetic weapons
 Hackers exclusion clause
 Terrorism Exclusion clause
 Maritime nuclear energy risk exclusion clause
 Terms of insurance for risks of war, strike

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 (5) Scope coverage:
- Total or partial loss of the hull caused by:
 Contact or collision with any other vessel, aircraft, land or water conveyance.
 Stranding, contact with rocks, submerged or floating objects, whether
mobileable or fixed, bridges, ferries, docks, dykes, dams, embankments,
wharves.
 Fire or explosion on board the vessel or elsewhere, causing damage to the
vessel.
 Jettison where necessary and reasonable.
 Disappearance.
 Earthquake, landslide or volcanic eruption.
 Storm, tsunami, cyclone, hail or lightning.
 Accidents in loading, discharging or shifting of the cargo, fuel or materials or
whilst the vessel lies at anchor, in dockyard or in workshop.
 Bursting of boilers, breakage of shafts or latent defects in any parts of the hull,
provided that such latent defects were not found in any regular inspection.
 Negligence of the Master, Officers, Crew Members, Pilots or repairers
provided that they are not the Insured hereunder or do not hold shares in the
vessel.
 General average expenses and salvage charges.
- Exclusions:
 Unseaworthiness of the vessel or operation outside the permitted areas.
 Any willful act or gross negligence of the Insured or such executors as the
Agent, Representatives, Master, Officers or Crew.
 Violation of any ban orders issued by authorities or any illegal business
activities
 Corrosion or wear and tear of machinery or equipment.
 Stranding of the vessel by the effect of tides or high and low ebbs while in
anchorage.

14
  The Master, Chief Engineers and Crew Members have not obtained proper
qualifications or certificates or accidents occur because of the use of alcohol,
drugs or other similar stimulants by them.
 The vessel is anchored at ports or waters where mooring is not permitted or is
not properly moored and tied up at ports or waters where anchorage is
permitted or the crew member in charge was not present when the incident
occurs.
(6) Hull insurance value:
The hull insurance value is calculated based on the declared actual value of
hull, machinery and equipment of the insured vessel on the market or based on the
insurance policy between the Insured and insurance company.
Insured can participate in insurance with an amount lower than the actual
value of the vessel, insurance company accepts one of the following two forms:
 Risk insurance in the form of undervalue
 Total loss insurance
(7) Insurance premium
- The premium is calculated on the basis of the insurance company's fee schedule
applicable to each type of vessel, boat or group of vessels or boats under specific
insurance conditions agreed upon by the insurance company and the Insured.
- Regulations on insurance premium refund in term insurance contracts:
 If both parties agree to cancel the contract, 90% of the insurance fee will be
refunded danger during the vessel's decommissioning
 In case the vessel is repaired and safely anchored at a port in the country, 75%
of the fee will be refunded during the vessel's stoppage time work
 In case the vessel is repaired and safely anchored at a port overseas: 60% of
the fee will be refunded
 If the vessel is completely damaged, the fee will not be refunded
(8) Insurance policy execution process
- Get an insurance claim
 Provide insurance claim form

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  Provide vessel records, registration records, loss reports, documents proving
the ship’s value
- Acceptance and conclusion of insurance policy
 Conduct vessel inspection before accepting insurance
 Issuance of the hull insurance certificate, insurance policy and annexes (if any)
- Insurance fee collection
Prepare fee collection notices and issue invoices

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CHAPTER 2: THE HULL INSURANCE MARKET IN VIETNAM
2.1. History of formation the Hull Insurance in Vietnam
The insurance industry in Vietnam was born later than many other countries in
the world, especially the hull insurance, which had not been focused on until
November 14, 2007, a seminar was held in Hanoi, with the participation of a large
number of managers and specialists in charge of insurance, maritime safety
legislation to shipowners from the North of Vietnam, they discussed the terms and
conditions of hull insurance and recognized hull insurance Vietnam considers as an
official insurance industry and put into operation. Vietnam Insurance has constantly
developed and attracted many shipowners to buy insurance to ensure the operation
of ships in the trend of globalization and world integration.
2.2. Overview of Hull Insurance market in Vietnam
2.2.1. The size of hull insurance market in Vietnam
In the past years, along with the strong development momentum of the
economy to Vietnam, the shipping industry has had a remarkable development in
both fleets and new shipowners participating in exploitation. Hull insurance as a
role is a service industry with long-term and close association with the shipping
industry, facing many opportunities and challenges. Opportunities due to economic
growth followed by the development of the transportation industry, as well as the
need for marine insurance in general and hull insurance in particular, has become
increasingly necessary.

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 Figure 2.1: Non-life insurance market share in 2020
According to data published by the Insurance Supervision Department
(Ministry of Finance), in 2020, Bao Viet Insurance is the market leader in terms of
original premium revenue when it is estimated at 9,301 billion VND, the next
positions are PVI Insurance at 7,547 billion VND, Postal Insurance - PTI at 6,000
billion VND, Bao Minh Insurance at 3,864 billion VND and Petrolimex Insurance -
PJICO at 3,479 billion VND.
In terms of market share of original premium revenue, Bao Viet is also the
leading name with 16.9% market share. Next is PVI Insurance with 13.7% market
share, PTI with 10.9% market share, Bao Minh with 7% market share and PJICO
with 6.3% market share. Thus, the total market share of original premium revenue
in 2020 of these 5 insurers is 54.8%.
In conclusion, the hull insurance market in recent years has grown
significantly in terms of scale, sales as well as service quality. Besides, the growing
market size is due to the entry of new insurance companies, creating fierce
competition in the market. This creates a driving force for insurance companies to
constantly improve the quality of insurance services, and at the same time lower the
insurance premiums, creating favorable conditions for shipowners to buy insurance.

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2.2.2. Structure of the hull insurance industry in the market
For hull insurance products and services, the Vietnamese market can now be
divided into three main business segments, which are bathing, fishing and riverboat
operations.
a) Marine insurance business
This is the business with the largest revenue in all types of hull insurance. The
revenue of marine insurance accounts for a very large proportion, usually from 50-
60%. Besides, in the past years, the fleet of Vietnamese ships has continuously
increased in quantity and quality, leading to a rapid increase in total revenue for this
type of ship in terms of absolute value as well as ratio in the field of hull insurance
services.
b) River ship insurance
Although Vietnam has a relatively interlaced river system, the transportation
by means of life is relatively close to the sea. However, river ship insurance services
still accounted for a low proportion. This is partly due to the fact that the risk for
means of transport on the river is much smaller than that on the sea, in addition to
the slow payment of fees and inefficient compensation settlement.
c) Fishing vessel insurance
With a long coastline, fishing is one of Vietnam's main industries. The fishing
vessel insurance market promises a lot of growth potential. However, with the
current situation that Vietnamese fishermen mainly fish near the shore, there are
few ships fishing far from the shore. Fishermen's awareness about insurance,
insurance conditions and compensation benefits is still poor. Therefore, the fishing
vessel insurance business in Vietnam is still underdeveloped.

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 motor vehicle insurance
6%
4%
4% health insurance
31%
Property and damage insurance
11%
Fire insurance

Cargo insurance
14%
Hull insurance and shipowner's
civil liability
30% Other insurance

Figure 2.2: Proportion of revenue by insurance business in 2020

According to estimated data of the Vietnam Insurance Association in the first
six months of 2020, the revenue of the non-life insurance market is estimated at
26,991 billion VND, an increase of about 7%, compensation is 9,028 billion VND,
the compensation rate is about 33% (excluding compensation provision).
Motor vehicle insurance's revenue reached 8,236 billion VND, accounting for
31% of the total market revenue, compensation of 3,821 billion VND,
compensation rate of 46%. Revenue of motor vehicle owner's liability insurance
reached 2,495 billion VND, accounting for 9%, up 33%. Voluntary motor vehicle
insurance revenue reached 5,916 billion VND, down 2% over the same period,
accounting for 22%, compensation was 3,434 billion VND.
Health insurance revenue reached 8,051 billion VND, accounting for 30%, up
8%, compensation 2,458 billion VND, claim rate 31% (not including compensation
provision).
Property damage insurance revenue reached 3,790 billion VND, accounting
for 14%, up 9%, compensation was 847 billion VND, claim rate was 22% (not
including compensation provision).
Fire and explosion insurance's revenue reached 3,068 billion VND, accounting
for 11%, up 13%, compensation was 776 billion VND, claim rate was 25% (not
including compensation provision).
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 Cargo insurance revenue reached 1,123 billion VND, accounting for 4%,
down 11%, compensation 279 billion VND, compensation rate of 25% (not
including compensation provision).
Inside hull insurance and shipowner's civil liability, revenue reached 1,101
billion VND, accounting for 4%, up 6%, compensation was 464 billion VND,
compensation rate 42% (not including compensation provision).
Other insurance services include liability insurance with 569 billion VND, up
2%, aviation insurance at 264 billion VND, down 16%, credit and financial risk
insurance at 428 billion VND, up 15%, and insurance business loss is 112 billion
VND, up 18%, agricultural insurance is 20 billion VND, down 33% over the same
period, insurance guarantee is 15 billion VND, up 3% over the same period.
2.3. An evaluation of Hull Insurance market in Vietnam
2.3.1. Advantages
In recent years, the hull insurance market is constantly growing in terms of
scale, sales and quality. The total amount of investment capital into the market has
also increased rapidly. Even in difficult economic times and the situation does not
look good for the business enterprises, the insurance purchase of hull insurance has
not decreased too sharply. This is mainly because the risks faced by enterprises in
this industry often cause great consequences, such as oil spills, collisions in ports,
collisions with other ships, ….
Moreover, in order to promote the insurance business and strengthen the state
management of the insurance business, promote socio-economic development, the
Government has timely paid attention to the insurance industry by issuing the
policies and decrees to promote and develop the insurance industry. After several
changes by the Government, the legal environment for insurance business is more
favorable with new policies and legal documents related to the industry.
Another advantage for shipowners in Vietnam when participating in hull
insurance is that, they will be able to share the loss when the risk occurs. These
losses or damages are often very huge because ships usually have enormous value
hulls and modern equipment.

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2.3.2. Disadvantages
In general, the marine cargo insurance market in Vietnam has many problems.
Firstly, the insurance market size is still small along with insurance companies
are lack of specialized knowledge. Hull insurance used to be one of the professions
that brought quite high revenue for insurance companies providing this product,
because civil shipowners, under the scope of marine insurance, is a product required
by law. However, in recent years, shipowners have faced many difficulties due to
direct competition with many foreign shipping lines, reduced freight rates, while
binding regulations and standards for crew members on the ship increased ...,
causing the hull insurance business to suffer a lot of damage. During the last 10
years, although the number of agencies has a steadily increase, it still can not catch
up with the development of the marine industry. Moreover, the operation of
agencies is in low quality. It is reflected in the lack of technology and the lack of
good experts especially in the field of insurance premium calculation, insurance
underwriting as well as risk management and investment.
The second difficulty that the Hull Insurance market faces is the weak ability
to exploit the market. The structure of the fleet of ships which is a priority object in
the hull insurance market contains mostly general cargo ship, bulk carriers.
Meanwhile, oil and chemical tankers and container ships which are the main focus
of insurance account for only a small proportion.

Figure 2.3: The proportion of types of ship in Vietnam in 2020

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 Source: Vietnam Maritime Administration

The third problem is a strong and unfair competition between insurance

companies that causes damage to the hull insurance market. Vietnam's insurance
market is much more active with the presence of 100% foreign owned companies
whose parent companies are the world's leading insurance companies with hundreds
years of experience. The strength of this company is not only in operating
experience, well-trained staff but also in the backing by financial resources and
huge assets from the parent company. As a result, they have a much greater ability
to lower their premiums than domestic insurance companies and easily dominate the
market in Vietnam. In contrast, domestic insurers are highly dependent on hull
reinsurance abroad. This is because the potential of domestic insurance companies
is still weak, so the fixing of hull insurance premiums is decided by the reinsurers.
Therefore, insurance premiums of domestic insurance companies are often higher
and cannot compete with foreign capital companies.
2.4. Development trends
In recent years, the insurance market has made great progress. Compared to
many countries in the region, Vietnam's insurance market started at a very early
stage, and the policy of developing the insurance industry is quite open. In recent
years, the insurance market in general has had a remarkable development, higher
than expected, specifically in 2018 when the insurance market achieved a growth
rate of over 22%. However, not every insurance company will have the same
market share, as it strongly depends on the operational capacity as well as the
market approach of each business.
According to the General Statistics Office, in 2020, the revenue of Vietnam's
non-life insurance industry increased by 13%. It is expected that 2021 will still be a
successful year for insurance businesses despite the economy affected by the covid-
19 pandemic because The non-life insurance industry is one of the few industries
not affected by covid -19.
Statement made by The Prime Minister declared that, by 2020, the insurance
market is expected to reach a total revenue of 3% - 4% of GDP; the scale of
insurance reserve funds by 2020 will increase 4.5 times compared to 2010.
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Especially in the future when Vietnam joins the AEC and TPP, the hull insurance
market is filled with great opportunities for promoting trade, attracting investment
as well as benefiting from an open and competitive global market.

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 CHAPTER 3: SOLUTIONS FOR SUSTAINABLE
DEVELOPMENT OF HULL INSURANCE MARKET IN
VIETNAM
3.1. Solutions for the Government
In order for the Hull Insurance market to operate smoothly on a large scale,
the Government needs to have a plan to promote the development of the service
market for transporting import and export goods by sea in Vietnam. Business
development, insurance needs and insurance for the crews and shipowners need to
be focused on. To improve the efficiency of hull insurance in Vietnam, the
government needs to take the following measures:
 Establish policies to manage the insurance market in a more stringent way, set
certain standards for those who want to establish marine insurance companies, hull
insurance; regulations on minimum capital, capacity and high professional
qualifications
 Complete the legal system on business in general and on hull insurance
business in particular. Promulgating clear, highly legal insurance laws to create a
safe legal environment to promote business development
 Creating and maintaining a healthy competitive environment through the
implementation of the state management role to best ensure the interests of the
victims
 The foreign trade development policy of the State will increase the potential
dangers that can be exploited. The policy encourages buying domestic insurance,
ensuring that businesses are equal in business.
 Issue a policy that encourage business enterprises to purchase insurance
services from domestic insurance companies, in order to create a comprehensive
and complete insurance market
 Necessary to build a reliable, neutral assessment agency to help businesses and
above all, the insured to determine the value of the insured ship
3.2. Solution for insurance companies
 In Vietnam, it is necessary to exploit and expand the market through
marketing channels and create insurance service packages suitable to the needs of

25
customers in Vietnam. Promote the marketing of hull insurance, disseminate
information in various forms, mainly by mass media such as newspapers, television,
radio, movies, posters seminars, talks or professional guidance.
 Secondly, insurers should be open and honest with their customer partners
about the premiums, the sum insured and the obligations, benefits attached ... to
avoid the case of premium debt due to the insured's ignorance. Moreover, the
insurance company should have appropriate effects on customer psychology,
exploit the market in a beneficial way, and at the same time satisfy the needs and
desires of customers.
 Thirdly, the insurers must seriously conduct the inspection and assessment in
order to find out the problems that may be hidden in each business deal, in order to
avoid unnecessary loss for the parties. This is understood as not only inspecting the
hull but also assessing and testing more deeply and comprehensively the factors that
may affect the insured object.
 In addition, research on a number of specific insurance models suitable for the
coordination of foreign trade, transportation and insurance activities. This model
can be based on the forms of joint ventures, associations, maritime associations
including shipowners, shippers, insurance, foreign trade groups, shipping and
marine insurance.
 Next, research to expand and improve the general rule of hull insurance,
especially the availability of additional provisions for different types of ships with
different operating ranges.
 Nevertheless, set reasonable insurance premiums on the basis of space and
time. Insurance premium is a special concern of shipowners when they want to sign
an insurance contract, therefore, the company should find all ways to reduce fees in
a reasonable way but still maintain enough compensation and profit. For example,
in the rainy and stormy season, there are often thunderstorms, high winds, and
rough seas, so that ships are likely to encounter high risks, the insurance premiums
will be high, whereas in the calm seas, the insurance premiums will be lower. Also,
the insurance premiums can be determined by space based on different markets.

26
Due to customer characteristics, consumption habits, income and other different
categories, the company may apply different fees.
 Lastly, improve the professional knowledge of the staff in all specialized
divisions of the group. Insurance operators need to master insurance products and
customer operations to fully advise customers. Surveyors need to be highly
qualified to determine damage and causes. The compensation officer needs to be
transparent in order to verify if the loss is within the scope of the insurance claim or
not, also to avoid disputes with customers that may affect the company's reputation.
3.3. Solutions for shipowners
 Implementation of regulations on ship quality and maritime safety:
Shipowners need to strengthen technical management, repair and maintain ships,
pay attention to equipping and supplementing safety equipment for the ships.
 Raising awareness of shipowners about the importance of insurance.
Waterway accidents happen much less often than road traffic, but if they do, it's
scandalous and tragic. There are cases that happen all over the world, such as the
shipwreck in Quang Ninh in which there were many international guests, or the
sinking of the Din Ky ship with several deaths.... Many shipowners have not
focused on buying liability insurance, therefore, the purchase value is still quite
low. As a result, when there is an incident with large compensation costs, the
shipowner cannot afford and must sell the ship to repay the debt. Consequently, it is
necessary for shipowners to participate in insurance against possible risks when
operating on waterways to ensure their interests, crew members and avoid damage
to vehicles.
 Raising awareness of shipowners on claims: Shipowners should have
specialized officers in charge of insurance operations; pay attention to raising the
crew's morale in ensuring the safety of the ship, such as promptly resolving the
situation when loss occurs; proactively collect information from insurance
companies and international associations about accidents that have occurred.
 Enhancing knowledge for shipowners: A shipowner or crew member, in
addition to ensuring health conditions, must have professional knowledge,
seaworthiness and foreign language skills to fully adapt to the global market.

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 CONCLUSION
The essay has given an overview of the hull insurance market in Vietnam
today. In general, the insurance market is developing strongly with positive signals.
This activity contributes significantly to production, business and people's life. For
international trade and sea activities, marine insurance in general and hull insurance
in particular is an indispensable requirement. In Vietnam, the hull insurance
business is growing day by day with the rise of the country.
Achieving success in a market full of difficulties and potential foreign
competitors is a big challenge for insurance companies in Vietnam. It requires a
thorough understanding of the insurance market in general and hull insurance in
particular, a strategic eye as well as precision in inspection work, application of
rules, sources of governing law, necessary documents and strict procedures. Facing
an insurance market with fierce competition from foreign companies, Vietnamese
insurance companies need to promote all potential strengths to stand firmly and
develop in this situation.
The hull market is becoming more and more complicated and advanced,
requiring Vietnamese insurance companies to constantly innovate to meet the needs
of both domestic and international customers, and drive potential customers to
Vietnam's insurance industry.
With the topic "An analysis of Hull Insurance Market in Vietnam: Problems
and Solutions", we hope to bring teachers and students an overview of the hull
insurance market in our country recently. We also give opinions and propose
solutions for the Government, hull insurance companies and shipowners in
particular and the insurance industry in general. We are looking forward to
receiving valuable comments from teachers and friends to improve our writing. We
sincerely thank you!

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 REFERENCES
1. Bao Minh Insurance (BMI), “Vietnam Non-Life Insurance Market Grows
Steadily”
https://www.baominh.com.vn/thi-truong-bao-hiem-phi-nhan-tho-viet-nam-phat-
trien-o-muc-on-dinh
2. General Statistics Office website:
https://www.gso.gov.vn/
3. Insurance Association of Vietnam (IAV), “Vietnam Insurance market data for
the first 6 months of 2020”
https://iav.vn/tong-quan,-so-lieu-thi-truong-bao-hiem/93637-93637-so-lieu-thi-
truong-bao-hiem-viet-nam-6-thang-nam-2020

4. PG Insurance (PJICO)
https://www.pjico.com.vn/san-pham/bao-hiem-than-tau-bien
5. PTI Insurance:
https://www.pti.com.vn/en/hull-insurance.html
6. Vietnam Maritime Administration, “How has the Vietnamese fleet changed after
nearly a decade?”
https://www.vinamarine.gov.vn/vi/tin-tuc/doi-tau-bien-viet-nam-thay-doi-nao-sau-
gan-mot-thap-ky
7. Vietnambiz, “Profits of non-life insurance companies are strongly divided,
where is the bright spot?”
https://vietnambiz.vn/loi-nhuan-cac-cong-ty-bao-hiem-phi-nhan-tho-phan-hoa-
manh-dau-la-diem-sang-20200910221212686.htm

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