Part I. Choose true or false? Explain why?

1. Contribution is the right of an insurer to call upon others similarly, but not
necessarily equally liable to the same insured, to share the cost of an indemnity
payment. True or false? Explain and give an example?

2. A named-perils policy covers only losses caused by all perils except those
excluded. True or false? Explain and give an example?

3. Nam bought auto insurance for his car, the insured value of the car is VND 600
million, sum of insured is VND 300 million. The car is crashed when the policy
stays in force, the damage of the car is VND 30 million. The insurance company
indemnifies VND 30 million to Nam. True or False? Explain?

4. Limitations of liability is the minimum amount payable by an insurance policy.

True or False? Explain and give an example?

5. Speculative risk refers to a situation where there is the probability of loss or no

loss. True or False? Explain and give an example?

Answer:
1. True. Contribution is an insurer's right to ask those who are similarly entitled
to the same insured, but not strictly equally, to share the burden of an
indemnity payment.
2. False. Named-perils policies cover loss or damage from these 16 events:

 Fire or lightning
 Windstorm or hail
 Explosion
 Riot or civil commotion
 Aircraft
 Vehicles
 Smoke
 Vandalism
 Theft
 Volcanic eruption
 Falling object
 Weight of ice, snow, or sleet
 Accidental water overflow or steam
  Sudden and accidental tearing apart, cracking, burning, or bulging of
certain household systems
 Freezing
 Sudden and accidental damage from artificially generated electrical
current

3. False.
4. False. Limitations of liability is the maximum amount payable by an
insurance policy
5. True. Speculative risk refers to price uncertainty and the potential for losses
in investments.

Part II. Exercise

Exercise: In an accident:

Car A: property damage: damage of the car: 42 mil. VND, business damage: ab
mil. VND. Driver is injury: Medicare cost: 90 mil. VND and income lost: 60
mil. VND.

Car B: property damage: damage of the car: cd mil. VND, business damage: 24
mil. VND.

Mistake of parties: A: 40%; B: 60%

Both cars are insured (property and third-party liability insurances); at time of
accident: the insurance policies are in force. (liability limit: 70
mil./risk/property and 70 mil./risk/person)

Two cars A and B bought insurance from two insurance companies X and Y in
turn.

Requirement: calculate the indemnity of the insurers to the insureds and the
actual damage of two car owners

Answer:

Step 1: Detemine the damage of parties:

Car A:
- Damage of car: 42 mil VND
- Business damage: ab = 96 mil VND
 - Personal damage: 90+60=150 mil VND
- Civil liability A  B :
 Property damage : 40% x (102+24) = 50,4 mil
Total damage is: 42+96+50,4+150= 338,4 million
Car B:
- Damage of car: cd = 42+60 =102 million VND
- Business damage: 24 million
- Civil liability B  A:
 Personal damage : 60% x 150 =90 million VND
 Property damage : 60% x (42+96) = 82,8 million VND
- Total damage is: 102+24+82,8 + 90 = 298,8 million VND
Step 2: Determine indemnity of insurance companies.
o IC X indemtifies car A owner:
- Damage of car : 42 million VND
- Civil liability consits of:
 Property damage liability: 50,4 million
- Total indemnity of insurance company X : 42+50,4 = 92,4 million
o Insurance company Y indemtifies car B owner:
- Damage of car: 102 million
- Civil liability consits of:
 Property damage liability: 82,8 million
 Personal damage: 70 million
- Total indemnity of insurance company Y: 102+82,8+70 =254,8 million
Step 3: Insurance companies are returned from car owner
- Insurance company X is returned from car A owner:
= 82,8 x [42/(42+96)] =25.2 million
- Insurance company Y is returned from car B owner:
= 50,4 x [102/(102+24)] = 40,8 million
Step 4: Determine actual indemnity of insurance companies
- Actual indemnity of IC X to car A owner: 92,4 – 25.2 = 67,2 million
- Actual indemnity of IC Y to car B owner: 254,8 – 40,8= 214 million
Step 5: Determine actual damage of car owners
Actual damage of car A owner:
- Income = Actual indemnity of IC X (Step 4) + Civil liability is paid by car B
owner (Step 1): 67,2+ 82,8 +90 = 240 million
- Expense = Total damage (Step1) = 338,4 million
 Actual damage of car A owner
= Expense – Income = 338,4 -240 =98,4 million
Actual damage of car B owner:
- Income = Actual indemnity of IC Y (Step 4) + Civil liability is paid by car A
owner (Step 1): 214 + 50,4 =264,4 million
- Expense = Total damage (Step 1) = 298,8 million
  Actual damage of car B owner
= Expense – Income = 298,8 – 264,4 = 34.4 million

Part III. Write a short essay (at least 300 words)

Topic: Assess the development of Vietnamese non-life insurance market.

Answer:

The Vietnamese people's income is growing as the economy develops. In addition, insurance
mechanisms and programs are constantly being changed in order to establish better market
environments. Non-life insurance companies have been able to sustain steady growth and extend
geographically thanks to insurance, improved financial performance, corporate governance, and
simplified operating procedures. Diversify business practices, maintain and increase the
consistency of insurance policies, and improve financial management.

Because of the non-life insurance industry's high penetration rate, competition among companies
is becoming increasingly fierce. There are 30 non-life insurance companies in Vietnam as of
2018, out of a total of 64 insurance companies. While, by the end of the first six months of 2018,
the bulk of the market share of premium sales was already distributed in the top five firms,
including BVH (20.84 percent market share), PVI (16.46 percent market share), PTI (8.61
percent market share), BMI (7.64 percent market share), and PGI (6.11 percent market share),
however, owing to rising pressure from the top companies below, the market share of these 5
firms is declining rapidly. From a market share of up to 70% in 2012, the big 5 firms' market
share had dropped to 55% by the end of 2017.

The more decentralized composition of this market is a trend that harms insurance
revenues and earnings from insurance operations of firms in the sector.
Furthermore, the involvement of large-scale global insurers with extensive
expertise would be a significant challenge for domestic businesses, especially the
current Top 5 firms. Competitive pricing of insurance premiums can become
irrational as a result of fierce competition. As a result, domestic businesses must
encourage the production of new goods in order to best serve consumers' needs.
Along with that, the process of widening and diversifying delivery networks,
especially online channels, is underway, with the goal of making the company's
goods more available to a wider spectrum of consumers, increasing payment
convenience, and improving service quality and company profile. In comparison to
other countries in the region, Vietnam's penetration rate is currently much smaller.
As of the end of October 2018, Vietnam's non-life insurance penetration rate had
hit 0.9 percent, implying that fewer than one out of every 100 individuals had a
cover. The disparity in penetration rates can be attributed to Vietnam's low per
capita income in the country, which makes paying a monthly premium for
insurance an issue. Furthermore, because of people's lack of knowledge about the
benefits of using non-life insurance to cover health and property risks, as well as
challenges in gaining access to insurance delivery platforms. Because of their poor
reputation, these types of products continue to be in short supply. However, this is
gradually evolving as consumers are being presented with information about non-
life policies on a daily basis by insurance dealers.