Last year, the Vietnamese insurance market maintained a high growth rate of 21.2 percent, with total revenue of VND105.61trn (USD$4.65bn), a senior finance ministry official has said.
This year, the aim of the insurance sector is to achieve total revenue of VND129.24trn, an increase of 22.38 percent from 2017. The insurance industry is also expected to benefit from the country’s projected economic growth of more than 6 percent annually over the next three years.
The figures were released at a recent meeting hosted by the Ministry of Finance’s Insurance Supervisory Authority (ISA) to review the sector’s 2017 performance and to set business targets for the year ahead.
Of the 2017 total revenue, non-life insurance premiums stood at VND40.56trn, representing an increase of 10.61 percent, and life insurance premiums totalled VND65.05trn, rising by 28.9 percent, said Mr Pham Thu Phuong, Deputy Director of the Ministry of Finance’s ISA.
In addition, total assets of insurance companies are estimated to have increased by 23.44 percent to VND302.94trn, reported Vietnam News Agency citing Mr Phuong. The companies re-invested VND247.8trn in the economy, which is an increase of 26.74 percent from 2016.
The insurers also paid VND29.42trn to customers in 2017, or 14.92 percent higher than in 2016.
To ensure the 2018 targets are reached, the insurance sector plans to re-invest VND305.49trn into the economy. Insurers are also targeting an increase in their total assets to VND370.81trn by the end of the year. The insurance industry will focus on building and streamlining policies and restructuring insurance firms, besides developing new products and improving the quality of services.
However, further growth of this sector means many challenges will remain.
Director of ISA Phung Ngoc Khanh explained that awareness among Vietnamese people about life insurance may have increased, but most still do not believe that it is worth the expense. In fact, almost all Vietnamese people are wary of it and think it unnecessary to buy insurance because they do not have a thorough understanding of its importance.
Life insurance products usually involve a long-term contract, so many customers are also concerned about their financial capacity to upkeep the policy into the future, Mr Khanh said. Doubts about the commitment of foreign life insurers to permanently operate in Vietnam also contribute to the low penetration rate, which stands at less than 1 percent.
However, besides traditional sales methods, life insurers have started partnering with commercial banks to increase sales and promote products.
Although the bancassurance market in Vietnam has remained slow, contributing only 2 percent to the total turnover of the insurance market, analysts believe that this channel has great potential, and now some 35 commercial banks and financial institutions are collaborating with insurers.
According to experts, the target of more than 20 percent growth in the insurance sector in 2018 is achievable as the operational scale and the distribution channels of insurers have been expanding, particularly amid an anticipated bancassurance boom.