Motorbike insurance sold for dirt cheap in Vietnam

In Ho Chi Minh City and other areas in Vietnam, any motorbike owner can now stop by a booth on the street to buy the third party civil liability insurance, or to put it simply, the motorbike insurance from unauthorized vendors at incredibly cheap prices.

It is required by law for Vietnamese motorbike drivers to carry the motorbike insurance when they are driving on the street. The insurance covers the policyholder against property damage and personal injury to any other party in case of traffic accident.

Should a driver fail to produce their insurance when pulled over by the traffic police, he or she will be fined at least VND100,000.

A number of local drivers buy the insurance merely to avoid the penalty, and few follow the required procedure to receive the compensation in case of accidents, insiders say.

Selling the motorbike insurance, meanwhile, has emerged as a lucrative business for the insurers as there is little chance that their customers will claim compensation.

Drivers deem the procedure to claim compensation complex, and people tend to flee the scene of accident rather than contacting police and the insurer for inspection.

Many insurance companies thus hire students, youths, and workers to sell the insurance right on the street, at prices that are far lower than the required rate by the finance ministry. Of course, the sellers are not professionally trained.

 While it is stipulated that the insurance costs VND66,000 per year, it is available at a wide range of prices, from VND60,000 for two years, to only VND15,000 a year.

Since motorbike insurance brings huge revenues but has a relatively short term, a number of insurers have ‘jumped’ into the field, and are now raking in billions of dong per month, a chief officer of an insurer told Tuoi Tre.