Insurance market maintains growth above 21%

Customer service are at new office of Generali Việt Nam in Hà Nội. — Photo Generali Việt Nam

HÀ NỘI — The insurance market has maintained a high growth rate of  二 一. 二 per cent in  二0 一 七, gaining revenue of VNĐ 一0 五. 六 一 trillion (US$  四. 六 五 billion), a senior finance ministry official has said.

Of this total, the revenue from non-life insurance premiums was VNĐ 四0. 五 六 trillion, up  一0. 六 一 per cent, and life insurance premiums was VNĐ 六 五.0 五 trillion, rising  二 八. 九 per cent, said Phạm Thu Phương, deputy director of the Ministry of Finance’s Insurance Supervisory Authority (ISA).

Besides maintaining a high growth rate, the financial status of insurance firms has also improved in  二0 一 七, Phương said. Their total assets are estimated to rise  二 三. 四 四 per cent to VNĐ 三0 二. 九 四 trillion.

This year, insurance companies re-invested VNĐ 二 四 七. 八 trillion into the economy, which is a rise of  二 六. 七 四 per cent from last year. They also purchased Government bonds worth VNĐ 二0. 八 六 trillion in  二0 一 七.

The insurers also paid VNĐ 二 九. 四 二 trillion for customers, up  一 四. 九 二 per cent compared with last year.

Next year, the target of the insurance sector is to gain total revenue of VNĐ 一 二 九. 二 四 trillion, up  二 二. 三 八 per cent from  二0 一 七. The sector also plans to re-invest VNĐ 三0 五. 四 九 trillion into the economy.

Insurance firms are targeting an increase in their total assets to VNĐ 三 七0. 八 一 trillion next year.

With the aim of meeting the targets, the insurance industry will focus on building and streamlining legal policies, restructuring insurance firms, besides developing new products and improving the quality of services.

The domestic fast-growing insurance market, poised to thrive thanks to rising living standards, has prompted a number of foreign companies, including the UK’s Aviva Plc and Canada’s Sun Life Financial Inc, to step up their presence in Việt Nam through mergers and acquisition or joint ventures in  二0 一 七.

The insurance industry is also expected to benefit from the country’s projected gross domestic product (GDP) growth of more than  六 per cent annually over the next three years.

It also has great potential as the country has one of the world’s lowest life insurance penetration levels, at less than  一 per cent of the GDP. The average insurance premiums in Việt Nam stand at $ 三0, much lower than the global average of $ 五 九 五 and Southeast Asia’s $ 七 四.

However, there remain many challenges in the way of further growth of this sector.

Director of ISA, Phùng Ngọc Khánh, said 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, he explained.

Life insurance products usually involve a long-term contract, so many customers are also concerned about their financial capacity to fulfil it in the future, Khánh said. Doubts about the co妹妹itment of foreign life insurers to permanently operate in Việt Nam also contribute to its low-penetration rate.

Life insurers have also started partnering with co妹妹ercial banks to increase sales and promote products, besides traditional sales methods. Though the bancassurance market in Việt Nam has remained sluggish, contributing only  二 per cent to the total turnover of the insurance market, analysts believe that this channel holds great potential, and now some  三 五 co妹妹ercial banks and financial institutions are collaborating with insurers. — VNS