Bao Viet Securities Company reports that the number of non-life insurance products also surged from 200 in 1999 to more than 1,000 today (Photo: Bao Viet Securities Company) Hanoi (VNA) - The participation of foreign investors in Vietnam’s insurancemarket will develop the market while enriching domestic insurers withexperience and governance.
According to a report of Bao Viet Securities Company (BVSC) on Vietnam’s insuranceindustry, the number of life insurance products in the country rose from 100 in2009 to 350 by the end of 2016. The number of non-life insurance products alsosurged from 200 in 1999 to more than 1,000 today.
BVSC also predicts that new products will continue to increase in the domesticinsurance market.
Meanwhile, modern distribution models of the local insurance industry have alsobeen gradually developing, thanks to the participation of foreign investors.
A survey of Swiss Re shows that Vietnam’s non-life insurance market is trendingto enlarge direct distribution channels, such as online or telesales, while thelocal life insurance market’s distribution is still mainly through intermediateagents.
Bancassurance was launched in Vietnam for the first time in 2001 with thecooperation between AIA and HSBC, while online distribution channel wasimplemented by a majority of large-sized insurers in 2016.
According to BVSC’s report, the capital hike, with the participation of foreigninvestors, has helped domestic insurers enhance their insurance capacitythrough training, legal framework and operation of products.
Pham Thu Phuong, deputy director of the Ministry of Finance’s InsuranceSupervisory Authority, said the insurance sector this year targets to gain atotal revenue of 129.24 trillion VND (5.69 billion USD), up 22.38 percentagainst 2017. The sector also plans to reinvest 305.49 trillion VND into theeconomy.
Insurance firms also target to increase their total assets to 370.81 trillionVND this year.
To meet the targets, the insurance industry will focus on building andstreamlining legal policies, restructuring insurance companies besidesdeveloping new products and improving the quality of services.
The insurance industry is expected to benefit from the country’s projectedgross domestic product (GDP) growth of more than 6 percent annually over thenext three years.
The industry has great potential as the country has one of the world’s lowestlife insurance penetration levels, at less than one per cent of the GDP. Theaverage insurance premium in Vietnam stands at some 30 USD, much lower than theglobal average of 595 USD and Southeast Asia’s 74 USD.
The fast-growing domestic insurance market prompted many foreign companies,including the United Kingdom’s Aviva Plc and Canada’s Sun Life Financial Inc,to step up their presence in Vietnam through mergers and acquisitions or jointventures in 2017.
The insurance market maintained a high growth rate of 21.2 percent in 2017,gaining a total revenue of 105.61 trillion VND. Besides maintaining a highgrowth rate, the financial status of insurance companies also improved in 2017,with their total assets rising by 23.44 percent to 302.94 trillion VND.-VNA
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