Foreign firms dominate Vietnam’s life insurance market
Updated at Wednesday, 10 Oct 2018, 09:39
The Hanoitimes - Vietnam’s market has 18 life insurers, of which only Bao Viet Life Insurance is Vietnamese while the rest are wholly foreign-owned companies or joint ventures.
The domestic fast-growing insurance market has prompted many foreign companies to step up their presence in Vietnam in the past years.
Vietnam’s insurance sector has targeted revenue of VND129.24 trillion (US$5.52 billion) this year, up 22.38 percent against 2017. If it hits the target, it would be the fifth consecutive year the insurance industry has posted annual growth of more than 20 percent. The industry’s total revenue surged by 21.2 per cent to VND105.61 trillion in 2017.
Foreign insurers have launched many special products to attract customers
Phung Ngoc Khanh, general director of the Ministry of Finance’s Insurance Supervisory Authority, said that Vietnam’s insurance market had high potential as the number of customers remained low while incomes and awareness were rising.
The insurance industry is also expected to benefit from the country’s projected GDP growth of more than 6 percent annually over the next three years.
It also has great potential as the country has one of the world’s lowest life insurance penetration levels at less than 1 percent of the GDP. The average insurance premiums in Vietnam stand at US$30, much lower than the global average of US$595 and Southeast Asia’s US$74.
According to experts, the participation of foreign investors who have good governance and experience in Vietnam’s insurance market will develop the market with new products.
An industry report by Bao Viet Securities Company (BVSC) found that the participation of foreign investors has helped increase the number of general insurance products in Vietnam from 200 in 1999 to over 1,000 today.
In addition, modern distribution models such as online, telesales or bancassurance in the local insurance industry had been gradually developing thanks to the participation of foreign investors.
Forecasting the local insurance market to further grow in the time ahead, many insurers have recently decided to increase charter capital, expand business operations and launch many special products to attract customers in a move to enhance their dominance in the market.
Accordingly, South Korea’s Hanwha Life Vietnam has increased its charter capital from US$103 million to US$233 million, which has helped the insurer list itself among the largest life insurance companies in the country.
CEO and Chairman of Hanwha’s Member Council Back Jong Kook said that strong financial resources are an important criterion for every life insurance company to help customers face all of life’s risks. The increase in capital will also bring better-quality customer services.
Prudential Vietnam has recently also raised its charter capital to VND4.128 trillion (US$180.57 million) after getting a nod from the Ministry of Finance.
According to Prudential, besides generally strengthening the company’s financial capacity, the additional capital will also enable it to further invest in enhancing its products and services and expanding its reach across the country.
Besides, foreign insurers have also launched many new products to attract customers in a move to enhance their dominance in the Vietnamese market.
By the end of August 2018, Canada’s Sun Life Vietnam launched its Leisure Retirement product, which is known as Sun Life’s trademark product due to the company’s strength in voluntary retirement program.
Meanwhile, Italy’s Generali Vietnam’s new product on cancer insurance covers all types of cancer and is 100 percent refundable if customers do not contract a disease. This is the only cancer insurance policy on the market.
Another big firm from the US, BIDV MetLife also launched its new product named Happy Gift last month, which is the first life insurance product in Vietnam to integrate protection against five common diseases, including cancer, stroke, heart attack, liver failure, and kidney failure.