The requirement that mandates the carrying of travel insurance should be expanded to two more groups including Vietnamese tourists using domestic tours and international visitors to Viet Nam, said director of Travel Department Vu The Binh.
Binh, whose department comes under the Viet Nam National Administration of Tourism, said the Tourism Law, which came into effect in 2005, made it mandatory only for Vietnamese tourists travelling abroad to carry travel insurance.
However, the current law did not stipulate the minimum level of travel insurance coverage for a tourist, he said.
"That is a sensitive point, and there are a number of tour operators that have utilised this lack of clarity to minimise insurance costs as much as possible," Binh said.
He said the department had suggested minimum compensation for an insured outbound Vietnamese tourist of US$100,000. Currently the highest compensation a Vietnamese tour operator offers is only $30,000 and few tour operators offer even this minimal level of coverage.
Binh said over the course of five years since the law was passed, awareness about travel insurance among tour operators and tourists themselves had risen remarkably.
"Initially, very few people realised the importance of travel insurance, but after experiencing misfortune or disaster when abroad, the need became a lot more apparent," he said.
"The increasing number of accidents which have occurred both on domestic and international tours reported in the media have underscored the need for travel insurance."
Tran Quang Huy, a Human Resources official in HCM City said: "Last year when I travelled to Hong Kong, I was badly hit in my eye by a door that suddenly opened. I was heavily bleeding. It cost me about VND2.5 million ($130) for a suture because I didn’t buy travel insurance beforehand."
"Looking back, I was lucky, because worse things can happen. An emergency abroad could be extremely expensive."
Binh said that gradually common awareness would grow about the need for travel insurance, but it should be a must rather than an option.
Doan Thi Thanh Tra, marketing director of SaigonTourist, one of the largest tour operators in Viet Nam, said since 2007 the company had blazed the trail in offering free travel insurance packages for its own customers. The maximum compensation levels for both domestic and international tours were VND60 million ($3,000) and VND588 million ($30,000), respectively.
"We run this programme, although it means we may make smaller profits compared to other tours that offer no travel insurance, or leave it up to the individual to buy it," she said.
Binh said in the travel industry’s early days, tour prices were deemed the most important competitive edge and tour operators strived to lower prices as much as possible, even if it meant cutting travel insurance fees.
But recently, there was a growing belief that price was just one among many factors, and tour packages with inclusive travel insurance were of premium quality, he said.
In order to be able to cover expenses in the case of accident or losses abroad, each tour operator are required to ring-fence VND250 million ($12,840) under the current law.
"This amount of coverage seemed miniscule, especially in the context of price fluctuations," Binh said.
In addition, the Tourism Law currently does not require a tour operator to submit proof to demonstrate their financial capacity during registration, so a number of operators with capital reserves as low as VND200 to 300 million ($10,200-15,300) were still eligible for operating licences.
Binh said: "It’s high time we started regulating tour operators, allowing only the most financially secure businesses to offer services."
"Taking a look at our neighbours, China; to serve the tourism demands of billions of citizens, there are only 200 tour operators. In order to provide inbound tourism, they need to deposit at least RMB700,000 ($103,000) while the ring-fenced insurance deposit to operate outbound tourism is RMB1 million ($147,000)."
The Government’s Administrative Reform Working Group on amending the Tourism Law discussed the issues last month.
Source: VietNamNet/Viet Nam News