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Insurer eyes VN's developing market
ERGO Insurance Group, one of Europe's leading insurers, this week signed a deal to hold 25 per cent stakes in the Vietnamese insurer Global Insurance Company (GIC), marking the first appearance of the company in Viet Nam.
On a visit to Viet Nam, Chairman of ERGO International's board of management Jochen Messemer and board member Andreas Kleiner shared with Viet Nam News their perspectives on the local insurance market.
ERGO decided Viet Nam would become one of its new focuses in Asia. At present, the key markets in the region are China, India and South Korea. Why did you select Viet Nam?
Jochen Messemer: When certain countries in Asia develop, other countries take over some of their roles. We believe that we will look for this in Viet Nam. Viet Nam is not only a fast growing country, but more and more skilled labour is taking over certain areas of production. This happened in China.
It's a natural thing and we've seen it before in Europe. Portugal developed as it took over certain production areas from richer countries such as Germany. Moreover, Viet Nam is standing on different feet. Your country has the ability for high productivity, is rich in natural resources and people are eager to learn.
Currently, the non-life insurance premium in Viet Nam just contributed 0.4 per cent to the country's gross domestic product, compared to 1.6 per cent in Malaysia and 3.1 per cent in Europe. This shows that there are many opportunities in your country to develop the insurance market.
Apart from Viet Nam, we are also keen on other countries in Southeast Asia.
However, not many Vietnamese are familiar with insurance services. Some people don't want to use them because they don't think it provides much. What do you think?
Jochen Messemer: It comes with time. When people are getting richer with increasing standard of life, they have more to lose. They can buy furniture, a car, a house. Normally when the wealth in population increases, people need protection as well.
Some kinds of protection have been made compulsory by law makers. For example, if you hit someone with a car, you have to pay for it and you need to have insurance. This is a mechanism used by governments to insure people protect their lives and goods.
In the business area, there are compulsory insurances as well and we can see the demand for insurance is tending to grow in Viet Nam too.
How does Viet Nam fit into your world strategy?
Andreas Kleiner: It's a clear signal that Viet Nam is the first country in Southeast Asia we entered. We took time to ensure that we had the right partner helping us enter the right market.
Despite facing the problems a young economy might have, your Government is working on measures to fix these. This will not be easy as you have to make sure that your economy is not growing too fast and you have to control the level of debt.
But I believe Viet Nam and other Asian countries are on a very good development path. We also see many opportunities from a young society such as the Vietnamese.
In 1996, when I came here for the first time, I saw many bicycles, some motorbikes and few cars. But every time I came back, I saw more motorbikes and cars and less bicycles. And now, very few bikes.
This sounds like developing opportunities for the insurance market.
What about the demand for insurance in Ha Noi and HCM City?
Andreas Kleiner: They are both dynamic cities. Our partner GIC has a strong presence in both cities as well as in the countryside.
How about the overall business of ERGO?
Jochen Messemer: Last year, we finished globally with roughly EUR19 billion premiums – about US$26 billion.
International markets contribute roughly a quarter of the total premiums. Their share will further increase as the growth comes mainly from international activities.
Profit in 2010 was about $480 million, a result we are happy with given some of the economic challenges we had to digest.
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