Gas companies’ awareness of buying productliability insurance increases higher than before. Although there are many
companies buying product liability insurance to bring more trust to customers
which is an effective marketing tool. However, few insurance companies are
qualified and courageous to provide this kind of insurance.
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Product liability: customers wait for insurance company |
Difficulties in providing product liability insurance
According to a survey at companies providing
this product, revenue of product liability insurance is still modest, only
takes up 1% total revenue. Although there is not official statistic, whole liability
insurance sector accounts for approximately 2% of total premium of whole
non-life insurance market and the compensation rate is under 10%. Exception is
that a top insurance company has compensation rate up to 84% in the first
quarter of 2014.
Talking about the paradox of product
liability insurance when the supply is more than the demand, a representative of
a non-life insurance company shares that product liability is quite complicated
in terms of fees and compensation. Product liability is known as long-tail
product because the period when customer sues may happen a long time after
buying product. At that time, insurance company still takes responsibility so
that the risk is very high.
A representative of an insurance company said
that the awareness of buying product liability insurance is more popular with
gas, cosmetic providers and so on recently.
Domestic product liability insurance
There are not many insurance companies
providing product liability insurance (only a few of the non-life insurance
companies), but in the future, when the demand of product liability insurance
increases significantly, the smaller insurance company will try to improve
competitiveness to take part in this “playground”.
Of course, there is a long road between
theory and reality, but when the economic context has got many difficulties, the
demand for property and marine insurance decreases, the product liability
insurance may be another attractive segment. Moreover, after the economic
crisis, the non-life insurance sector is in the phase of restructuring insurance
products, changing orientation, instead of just focusing on premium products
generate higher revenues but customers increasingly diminished as difficult.
Product liability insurance is to protect the
manufacturer or the distributor in cases where products have adverse effects,
leading to the manufacturer / distributor is responsible to compensate the
customer. A fairly common example is insurance of gas tanks. When manufacturing
companies participating insurance product liability, corporate customers will
be compensated insurer / behalf manufacturing enterprises have a legal
responsibility to pay compensation for personal injury / material damage caused
to the 3rd person in the insurance period due to a problem related to business
operations.
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