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Economic crisis takes its toll on insurance market
The life and general insurance market has been hit by the global recession as companies have had to scale down their production and reduce staff.
Phung Dac Loc, general secretary of the Association of Viet Nam Insurers (AVI), said sales to domestic and overseas markets by production and business companies had fallen.
"The situation has affected the financial capacity to pay for insurance products covering assets and employees, among others," Loc said.
Many potential customers are in industries faced with difficulties, including shipbuilding, shipping, aviation, coal, petroleum, steel and cement.
Individuals are also tightening their budgets, leaving challenges for the life insurance companies.
The general insurance sector gained a premium turnover of VND2.99 trillion (US$166 million) during this year’s first quarter.
The figure is 9.5 per cent higher than the amount of the same period in 2008.
This was 40 per cent lower than the rate of year-on-year growth of last year’s first quarter.
Motor vehicle insurance topped the non-life insurance turnover with VND964 billion, up more than 10 per cent on 2008’s first quarter, perhaps due to the compulsory regulation on buying the insurance.
Compensation reached VND381 billion, almost 40 per cent of the collected premium amount.
Construction and installation insurance posted a turnover of VND363 billion, up 50 per cent. About VND67 billion was paid in compensation, accounting for more than 18 per cent of turnover.
Insurers collected VND360 billion in medical and personal accident products, up over 21 per cent. Compensation in these insurance products represented the largest stake of 50.3 per cent of the collected fees.
Hull and ship’s owner civil liability insurance brought in VND341 billion, up 20 per cent. However, almost VND91 billion went to compensation.
Oil and gas insurance recorded the highest growth rate of 94 per cent, reaching VND265 billion.
Meanwhile, aviation insurance saw a significant fall of 59 per cent as it achieved a turnover of VND122 billion.
Bao Viet, though, topped the 10 insurers with the highest turnover, at VND822 billion, but this was still a decrease of almost 9 per cent. Other big names but losers were Bao Minh and PJICO.
Life insurance
Life insurance companies achieved a total turnover of VND2.514 trillion ($140 million), up 7 per cent over 2008’s first quarter, an encouraging result in difficult times, according to the AVI general secretary.
The share for Prudential was 39.63 per cent; Bao Viet Life, 34.95 per cent; and Manulife, 10,4 per cent.
In the first three months, new contracts were 10 per cent lower than 2008’s same period.
Of the 114,580 new contracts, Prudential represents more than 44,100, Bao Viet Life, almost 32,100 and AIG Life, 10,100.
During the period, over 151,000 contracts expired, with almost 62,000 under Prudential, 53,000 for Bao Viet Life and 17, 400 for AIG Life.
The total in-effect contracts at the end of March was 3,828,700, a year-on-year fall of 1 per cent.
Prudential led with 1.567 million contracts, Bao Viet Life followed with over 1.535 million and Manulife ranked third with 254,300 contracts.
The maximum liability taken by insurers totalled VND274 trillion, up 14 per cent.
This resulted from the availability of insurance products with higher protection from affordable fees.
Again, Prudential accounted for the largest share in this liability, with VND91 trillion.
Around VND630 billion was paid to clients, with Bao Viet Life taking the lead, spending VND410 billion.
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