Foreign insurers in Vietnam remain upbeat about the potential of domestic insurance market in spite of experiencing lower growth last year due to ongoing global financial turmoil.
Immediately after Vietnam opened the door of insurance market, a line-up of foreign investors flooded into Vietnam with diversified and professional products and services for asset, goods delivery and mechanical vehicles.
It has triggered up a brisk and fierce competition among foreign and domestic insurers, in which the foreigners have more advantages than locals.
Phung Dac Loc, General Secretary of Vietnam Insurance Association, said that the Vietnamese life insurance market now is totally dominated by foreigners. Last year, Prudential led the market with total premium of VND4,270 billion, followed by Bao Viet VND3,425 billion, Manulife VND1,072 billion, and ACE Life nearly VND568 billion.
Regarding non-life insurance market, big gainers in 2008 were still domestic firms, typically Bao Vietnam with the non-life insurance premium of VND3,305 billion, PetroVietnam Insurance (PVI) VND2,016 billion and Bao Minh VND1,981 billion.
However, behind the above successful figure of Vietnamese insurers is a big alarming on competitive strength of local insurers.
Factually, the success is for the reason that only few foreign firms were licensed to operate in non-life insurance. Especially, Vietnamese firms' good performance in non-life insurance field was thanks to the advantage of the policy of compulsory insurances mainly insurance for mechanical vehicles.
Analysts believed that the advantage will be reduced gradually in 2009 because foreign insurers will have the right to launch the insurance products as Vietnamese companies.
Vietnam’s insurance market is forecasted to grow 12 per cent-13 per cent in 2009 from total premium of VND26.082 trillion last year, according to the Ministry of Finance.
The ministry also predicted total premiums from non-life insurance market to increase by 15-18 per cent and those from life insurance market to up 8-10 per cent this year.
However, Takashi Fujii of Dai-Ichi Life Vietnam forecast that this year Vietnam’s market can grow at over 20 per cent because in Vietnam there is still a lot of room for expansion.
With a population of over 86 million people, there are only about five million people who have insurance, he explained.
RNCOS, a research consulting service company, released a report in September that agreed with Fujii. The report, entitled Vietnam’s Insurance Sector Forecast to 2010, forecast that Vietnam’s insurance industry would grow at an annual growth rate of around 12.1 per cent during 2008-2010. The report predicts that investment-linked insurance products will decide the future of the life insurance industry in the country.
Vietnam now has 11 life insurers, 26 non-life insurers, one re-insurance company (Vinare) and 10 insurance brokerages, reported by the finance ministry. (Labor)
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