According to a report of Bao Viet Securities Company (BVSC) on Vietnam’s insurance industry, the number of life insurance products in the country rose from 100 in 2009 to 350 by the end of 2016. The number of non-life insurance products also surged from 200 in 1999 to more than 1,000 today.
BVSC also predicts that new products will continue to increase in the domestic insurance market.
Meanwhile, modern distribution models of the local insurance industry have also been gradually developing, thanks to the participation of foreign investors.
A survey of Swiss Re shows that Vietnam’s non-life insurance market is trending to enlarge direct distribution channels, such as online or telesales, while the local life insurance market’s distribution is still mainly through intermediate agents.
Bancassurance was launched in Vietnam for the first time in 2001 with the cooperation between AIA and HSBC, while online distribution channel was implemented by a majority of large-sized insurers in 2016.
According to BVSC’s report, the capital hike, with the participation of foreign investors, has helped domestic insurers enhance their insurance capacity through training, legal framework and operation of products.
Pham Thu Phuong, deputy director of the Ministry of Finance’s Insurance Supervisory Authority, said the insurance sector this year targets to gain a total revenue of VND129.24 trillion (US$5.69 billion), up 22.38% against 2017. The sector also plans to reinvest VND305.49 trillion into the economy.
Insurance firms also target to increase their total assets to VND370.81 trillion this year.
To meet the targets, the insurance industry will focus on building and streamlining legal policies, restructuring insurance companies besides developing new products and improving the quality of services.
The insurance industry is expected to benefit from the country’s projected gross domestic product (GDP) growth of more than 6% annually over the next three years.
The industry has great potential as the country has one of the world’s lowest life insurance penetration levels, at less than one per cent of the GDP. The average insurance premium in Vietnam stands at some US$30, much lower than the global average of US$595 and Southeast Asia’s US$74.
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 joint ventures in 2017.
The insurance market maintained a high growth rate of 21.2% in 2017, gaining a total revenue of VND105.61 trillion. Besides maintaining a high growth rate, the financial status of insurance companies also improved in 2017, with their total assets rising by 23.44% to VND302.94 trillion.