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Insurance industry weathers crisis
The insurance industry has targeted a growth rate of 12-13 per cent by the end of 2010, based on positive trends expected after the global financial crisis ends.
A report by RNCOS, an international market research consulting company, predicts that Viet Nam’s insurance market could become one of the fastest growing in the world.
With only 10 per cent of its population of 85 million owning insurance, life insurance has immense growth potential in the country.
Industry insiders say the growth rate of life insurance is expected to rise by 8-10 per cent and general insurance 15-18 per cent by the end of 2010.
Eleven local companies are involved in life insurance, 27 in general insurance, 10 in insurance brokerage, and one in reinsurance. Combined investment assets are nearlyVND18 trillion (US$1 billion).
Analysts, however, said several challenges must be addressed, including improving marketing and settling industry shortcomings.
Toshiaki Egashira, president and CEO of Japan’s Mitsui Sumitomo Insurance Company, said the biggest problem facing insurers was lack of public awareness of the industry. He said companies should take advantage of opportunities to expand the market and build healthy competition among insurers.
A representative of the Viet Nam Insurance Association (VIA) said adjustments must be made to the legal framework that governs the country’s World Trade Organisation’s commitments.
New regulations should be created to facilitate insurance companies’ provision of new products, he said.
The Government should also create flexible regulations for the insurance market to provide a safety net for the industry in times of distress. The current insurance product distribution system must be improved as well, the VIA general secretary, Phung Dac Loc, said.
"The high growth the insurance sector achieved in the last few years was created by the expansion of distribution networks, including the number of agents," Loc said.
"However, many insurers focused only on recruiting new agents but they did not pay attention to training or using them effectively," he added.
He said that procedures related to compensation were still complicated and unclear, and that most insurers used IT poorly. In addition, insurance companies did not update new insurance contracts, classify customers and evaluate insurance risks or losses.
Financial experts have asked authorities to closely monitor the global financial and insurance markets so that companies could make timely decisions about reinsurance and financial investment activities.
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