ĐẠI HỌC MỞ - TP. HCM UNIVERSITE LIBRE DE RUXELLES UNIVERSITE OUVERTE DE HCM VILLE ECOLE DE COMMERCE SOLVAY MMVCFB PROGRAMME DE MAITRISE EN MANAGEMENT VIETNAM - COMMUNAUTE FRANCAISE DE BELGIQUE NGUYEN VAN TUAN MOTOR VEHICLE INSURANCE FRAUD AT PETROLIMEX JOINT-STOCK INSURANCE COMPANY PERIOD 2000 - 06/2006: ANALYSIS & SOLUTIONS MASTER OF MANAGEMENT THESIS Ho Chi Minh City, Vietnam 2007 ĐẠI HỌC MỞ - TP. HCM UNIVERSITE LIBRE DE RUXELLES UNIVERSITE OUVERTE DE HCM VILLE ECOLE DE COMMERCE SOLVAY MMVCFB PROGRAMME DE MAITRISE EN MANAGEMENT VIETNAM - COMMUNAUTE FRANCAISE DE BELGIQUE NGUYEN VAN TUAN MOTOR VEHICLE INSURANCE FRAUD AT PETROLIMEX JOINT-STOCK INSURANCE COMPANY PERIOD 2000 - 06/2006: ANALYSIS & SOLUTIONS MASTER OF MANAGEMENT THESIS Advisor Dr. TRAN XUAN KIEM Ho Chi Minh City, Vietnam 2007 This is my original work. Any data, result or quote in the project is clearly identified. NGUYEN VAN TUAN ACKNOWLEDGEMENTS I would like to express my sincere thanks to Professor Doctor Tran Xuan Kiem who serves as my local coach and guidance, supports and comments on my research papers. Despite the complexity and scope of the topic, he convinces me with scientific instructions and valuable suggestions from the very beginning to the completion of the thesis. My great thanks also expressed to professors in the roles of arguments and defense for contributing valued ideas, science and practices, which much encourages me. I would also like to thank deeply Professors of thesis defense committee who spare their time to pay attention to my presentation, give comments and pose valuable questions, which help me to be more comprehensive of the topic of my thesis. My gratefulness extended to the two Directors of the MBA program, Lawyer Doctor Tran Anh Tuan and Prof. Nagel, Vietnamese and Belgian professors, coordinators of the MBA Vietnam - Belgium program that I am honored to follow during the past two years. Last but not least, I am grateful to the Management Board of PJICO, my classmates, colleagues and my beloved family members for providing me with time release to pursuit of the MBA program at Hochiminh City Open University and Solvay Business School/ University Libre of Brussel. TABLE OF CONTENTS Commitment Acknowledgemennts Contents List of tables List of graphs List of abbreviations Glossary INTRODUCTION 01 1 - The reason to choose the subject 01 2 - The aim of the subject 02 3 - The object and scope of the research 02 4 - The research method 02 5 - The structure of the thesis content 03 CHAPTER I : GENERAL THEORY OF MOTOR VEHICLE INSURANCE AND INSURANCE FRAUD 1.1 - The objective necessity and the effect of motor vehicle insurance 04 1.1.1 - The role and feature of road traffic 04 1.1.2 - The features of motor vehicle taking part in road transport 04 1.1.3 - Necessity of motor vehicle insurance 05 1.1.4 - The effect of motor vehicle insurance 07 1.2 - The basic content of motor vehicle insurance 07 1.3 - Motor vehicle insurance fraud 08 1.3.1 - Insurance fraud 08 1.3.2 - Types of motor vehicle insurance fraud 08 1.3.3 - Cause arising behavior of motor vehicle insurance fraud 08 1.3.4 - Consequence of motor vehicle insurance fraud 08 1.3.5 - Insurance fraud of some countries in the world 09 CHAPTER II : SITUATION OF MOTOR VEHICLE INSURANCE FRAUD AT PETROLIMEX JOINT-STOCK INSURANCE COMPANY PERIOD 2000 - 2005 2.1 - About PJICO 10 2.1.1 - History of establishing and developing PJICO 10 2.1.2 - Market share in the non-life insurance market 10 2.2 - Situation of performing motor vehicle insurance 12 2.2.1 - Insurance performance 12 2.2.2 - Control of loss 13 2.2.3 - Inspection and compensation 14 2.2.4 - Evaluating business results of motor vehicle insurance 15 2.3 - Status of motor vehicle insurance fraud at PJICO period 2000-2005 16 2.3.1 - Status of insurance fraud period 2000-2005 16 2.3.2 - Cause arising of motor vehicle insurance fraud at PJICO 19 2.3.3 - Consequence of business results due to insurance fraud 20 2.4 - Prevention and disruption of motor vehicle insurance fraud at PJICO 21 2.4.1 - Advantages and disadvantages 21 2.4.2 - Doubtful symbols of insurance fraudulence 22 2.4.3 - Solutions to prevent and disrupt motor vehicle insurance fraud 23 2.4.4 - Evaluating effect of fraud prevention and disruption 25 2.4.5 - Existing problems 25 CHAPTER III: RECOMMENDATIONS TO REINFORCE PREVENTION AND DISRUPTION OF MOTOR VEHICLE INSURANCE FRAUD AT PJICO 3.1 - Recommendations to PJICO 27 3.1.1 - General strategy 27 3.1.2 - Controlling policy documents 28 3.1.3 - Enhancing agent’s sense of profession 28 3.1.4 - Inspection and compensation 29 3.2 - Recommendations to Association of Vietnamese Insurers 29 3.3 - Recommendations to the State’s organizations 30 CONCLUSION 32 References LIST OF TABLES Table Name of Table Page 2.1 Management cost of motor vehicle insurance from 2000 to 2005 13 2.2 Survey & claim of motor vehicle insurance from 2000 to 2005 14 2.3 Activities of motor vehicle insurance in the first half of the year 2006 15 2.4 Business results for motor vehicle insurance from 2000-2005 16 2.5 Situation of motor vehicle insurance fraud at PJICO period 2000-2005 17 2.6 Expenditure for management of operations 20 LIST OF GRAPHS Graph Name of Graph Page 1.1 Number of motors registered from 2000 to 11/2006 05 1.2 Number of automobiles registered from 2000 to 11/2006 05 1.3 Road traffic situation of Vietnam from 1991 to 2006 06 2.1 Market share of non-life insurance companies year 2003 11 2.2 Market share of non-life insurance companies year 2004 11 2.3 Market share of non-life insurance companies in 2005 11 2.4 Premium income of the year 2004 & 2005 12 2.5 Growth rate of motor vehicle premium income 13 LIST OF ABBREVIATIONS ALFA Agence pour la lutte contre la fraude aø l’assurance AVI Association of British Insurers AVI Association of Vietnamese Insurers IBC Insurance Bureau of Canada UAP Union des Assurances de Paris GLOSSARY Assured: The same as an “Insured”, “Policyholder”, or someone has an insurance policy. Claim: Any request or demand for payment under the terms of the insurance policy. Cover: A policy covering a number of types of loss or damage. Policies may also offer additional benefits such as medical expenses and legal costs. Deductible: The specified amount a loss must exceed before a claim is payable. Only the amount that is in excess of the deductible is recoverable. Depreciation: The decrease in value of any property due to wear, tear, and/ or time. Generally, depreciation is no an insurable loss. Excess: An amount of money that the policyholder has to pay towards the cost of a claim. Exclusion: Restriction in your insurance policy that limits and may exclude coverage for certain perils, persons, property or locations. Fraud: Deliberate trickery intended to gain an advantage. Fraudster: Person who makes fraud. Insurance fraud: The act of falsifying or exaggerating the facts of an accident to an insurance company to obtain payment that would not otherwise be made. Third party: Person or entity not party to an agreement but with an interest in the agreement. [...]... of preventing and disrupting motor vehicle insurance fraud at Petrolimex Joint- Stock Insurance Company Master of Management Thesis Page 3 Motor vehicle insurance fraud at PJICO period 2000- 06/ 2 006: Analysis & Solutions CHAPTER I: THE GENERAL THEORY OF MOTOR VEHICLE INSURANCE AND INSURANCE FRAUD 1.1 - THE OBJECTIVE NECESSITY AND THE EFFECT OF MOTOR VEHICLE INSURANCE 1.1.1 - The role and feature of road... experience at PJICO Gia Dinh - the Branch of Petrolimex Joint- Stock Insurance Company, I have decided to choose the subject of Motor vehicle Insurance Fraud at Petrolimex Joint- Stock Insurance Company period 20000 6/2 006: Analysis & Solutions” to do as my thesis 2 - The aim of the subject To make clear the problem of motor vehicle insurance fraud, the subject comes to the research of the real situation at. .. own evaluation: Assessing the formality and the contents, this thesis gets Good rating, 9/10 The Counsellor Tran Xuan Kiem, DBA THE FIRST ARGUMENT THE SECOND ARGUMENT Motor vehicle insurance fraud at PJICO period 2000- 06/ 2 006: Analysis & Solutions MOTOR VEHICLE INSURANCE FRAUD AT PETROLIMEX JOINT- STOCK INSURANCE COMPANY PERIOD 2000 - 06/ 2 006: ANALYSIS & SOLUTIONS INTRODUCTION 1 - The reason to choose... basis of motor vehicle insurance and insurance fraud Chapter 2 presents the situation of motor insurance fraud at Petrolimex Joint- Stock Insurance Company in the period of 2000- 2005 Chapter 3 suggests recommendations to reinforce prevention and disruption of motor vehicle insurance fraud at PJICO The author has proved to master properly basic theorical knowledge of the subject matter, as well as to apply... general, and of Petrolimex Joint- Stock Insurance Company (abbreviated as PJICO) in particular Now, we should give a cursory glance at the situation of motor vehicle insurance compensation of Vietnamese non-life insurance companies in the first half of the year 2 006 Master of Management Thesis Page 1 Motor vehicle insurance fraud at PJICO period 2000- 06/ 2 006: Analysis & Solutions The ratio of the total... insurance fraud period 2000- 2005 Going into the details of the real situation at PJICO period 2000 - 2005, there is one thing that the prevention and disruption of motor vehicle insurance Master of Management Thesis Page 16 Motor vehicle insurance fraud at PJICO period 2000- 06/ 2 006: Analysis & Solutions fraud has not actually been efficient yet, illustrated as follows: Table 2.5: Situation of vehicle insurance. .. increase of the State budget and creating jobs for employees 1.2 - THE BASIC CONTENT OF MOTOR VEHICLE INSURANCE Motor vehicle insurance is comprised of different types and divided into two: Compulsory Insurance and Voluntary Insurance - Compulsory Insurance: + Civil liability insurance for motor vehicle owner + Civil liability of motor vehicle owner for passengers - Voluntary Insurance: + Motor vehicle physical... physical damage insurance + Motor vehicle owner’s civil liability to goods in transit + Personal accident insurance of riders on non-passenger service car and driver, assistant driver Master of Management Thesis Page 7 Motor vehicle insurance fraud at PJICO period 2000- 06/ 2 006: Analysis & Solutions 1.3 - MOTOR VEHICLE INSURANCE FRAUD 1.3.1 - Insurance fraud With strong growth of non-life insurance market,... a cause leading to more and more traffic accidents with higher and higher seriousness In nearly 7 years (from 2000 to 11/2 006) , the number of motors produced locally and imported reached to over 12,823,000 units, and automobiles Master of Management Thesis Page 4 Motor vehicle insurance fraud at PJICO period 2000- 06/ 2 006: Analysis & Solutions assembled locally and imported reached to 500,300 units,... status of insurance fraud, every American household pays more from USD 200 to USD 300 per year for increasing insurance premium For this reason, in the world, insurance fraud prevention and disruption have been paid much attention to by insurance companies Master of Management Thesis Page 9 Motor vehicle insurance fraud at PJICO period 2000- 06/ 2 006: Analysis & Solutions CHAPTER II: SITUATION OF MOTOR . Motor vehicle insurance fraud at PJICO period 2000- 06/ 2 006: Analysis & Solutions Master of Management Thesis Page 1 MOTOR VEHICLE INSURANCE FRAUD AT PETROLIMEX JOINT- STOCK INSURANCE COMPANY. theoretical basis of motor vehicle insurance and insurance fraud. Chapter 2 presents the situation of motor insurance fraud at Petrolimex Joint- Stock Insurance Company in the period of 2000- 2005. Chapter. motor vehicle insurance fraud 08 1.3.5 - Insurance fraud of some countries in the world 09 CHAPTER II : SITUATION OF MOTOR VEHICLE INSURANCE FRAUD AT PETROLIMEX JOINT- STOCK INSURANCE COMPANY