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Non-life insurers eye market
The financial crisis is a chance for insurers to expand their market and the process has already begun. In the first six months of this year many life and non-life players performed positively with 27 of them presenting more than 100 products, taking advantage of forecasted robust growth in quality, service and prestige.
Such positive predictions are based on the fact Viet Nam has one of the highest proportions of young people in the world with more than 54 per cent of people aged below 30 and with increasing per capita income.
Also, Vietnamese are spending more on luxury products and, as a result, Viet Nam is seen as one of the biggest potential markets in Asia.
General Department of Customs figures show automobile imports in the first half of this year reached 23,100 units at a total cost of US$392.2 million while in June alone motorbike imports declined slightly with 7,500 units worth $6.8 million.
Foreign non-life players have been quick to recognise Viet Nam’s potential. Liberty Insurance general director Carlo Vanegas last week said: "We are excited about the optimistic forecast for economic recovery as well as the growth of the non-life insurance sector in Viet Nam."
One forecast, by Global Market Research & Consultant Company, said the non-life insurance sector in Viet Nam would grow by 25 per cent from 2009 and 2013 despite the global economic downturn.
This is an opportunity for insurance companies to invest more to create competitive advantages.
US-based Liberty entered the country almost two years ago. What made Carlos believe in Viet Nam was the fact car owner numbers had been increasing daily. But of the 500,000 privately owned automobiles today, only 30 per cent were insured, he said. Liberty marketing director Nguyen Huu Huan said the opportunity belonged to those who made great efforts in customer care, quickly responding to emergencies and settling claims.
Mitsui Sumitomo Insurance Group president Toshiaki Egashira said one obstacle was low public awareness of insurance, which was considered an opportunity.
Viet Nam Insurance Association general secretary Phung Dac Loc said Viet Nam also needed to improve its Insurance Law in line with the country’s commitments to the World Trade Organisation to assist insurers to introduce products.
Loc said the economic crisis had caused a downturn in business and production and an increase in unemployment in Viet Nam, making it difficult to pay insurance premiums.
To deal with the problem, the Government had provide a 4 per cent interest rate subsidy and delayed the deadline for income tax returns. As a result, Viet Nam was growing by 3.1 per cent.
In the first quarter of this year, revenue from non-life insurance premiums reached VND2.9 trillion ($161 million), an increase of 9.5 per cent over the same period last year.
Automobile and motorbike insurance took the lead with VND964 billion ($53.5 million), or 10.33 per cent increase year-on-year.
Healthcare and personal accident insurance revenue was VND360 billion ($20 million), an increase of 21.18 per cent over the same period last year. Premiums totalled VND181 billion ($10 million).
Insurers ranking in the top 10 for revenue included Bao Viet which posted a revenue of VND822 billion ($45.6 million), a decline of 8.99 per cent over the same period last year. PetroVietnam Insurance Company earned VND709 billion ($39.3 million), up 25.74 per cent; Bao Minh Insurance earned VND447 billion ($24.8 million), down 13 per cent; Petrolimex Joint Stock Insurance Company VND215 billion ($11.9 million), down 14.23 per cent; Bao Long VND61.7 ($3.4 million), up 19.5 per cent; newly established Aviation Insurance VND61 billion ($3.3 million) and Samsung Vina Insurance VND59.5 billion ($3.3 million), up 20.7 per cent.
Bao Minh Insurance said that by the end of June, it had completed 59 per cent of its yearly target, equivalent to VND97 billion ($5.3 million).
Over the past 10 years, the Viet Nam insurance industry achieved an average growth rate of more than 20 per cent a year.
Viet Nam Insurance Association statistics showed Viet Nam non-life insurance market had 20 insurance products in 1999. It now boasts more than 600 products registered by enterprises and three compulsory products. The sector has nearly 200 products approved by the Ministry of Finance.
One foreign insurance company director said the crisis and unstable interest rates would make people seek stabilisation, providing an opportunity for the insurance industry to bring people security and secure finance.
Among the challenges facing the insurance players were diversifying products and better responding to demands from customers so as to turn challenges into opportunities.
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