Insurance Brokerage - Potential and Prospect

Ms Doan Vuong Kieu Khanh, a representative of Groupama Insurance Company, said: On the chart of global insurance premiums categorised by country, Japan took the lead with 11.4 per cent, followed by China (9 per cent), Germany (7 per cent) and the U.S. (6 per cent) while Vietnam’s market share is modestly 0.5 per cent. This shows that Vietnamese enterprises do not place importance on risk insurance. In 2011, the country’s export and import turnover exceeded US$200 billion but freight premiums were only US$50 million, accounting for modest 0.02 per cent of total import and export turnover. This is the expense of Vietnamese economy. Traders usually buy CIF insurance for imports and purchase FOB for exports.

 

She said in 2006 - 2012, the rate of damage of Vietnamese goods tends to decrease because businesses began to focus on risk prevention. There are many route sections for exporters and importers buy insurance (from warehouse to warehouse, from port to port, from warehouse to port, and from port to warehouse). However, they should purchase insurance from their warehouses to the port of destination as they only need to pay 10 - 20 per cent more to have freights insured throughout the journey. Ms Khanh said most Vietnamese enterprises do not have freights insured on domestic inland routes, from the factory to the port of departure, as the degree of risks is very low. This is their limited perception because risks can occur at any time, anywhere.

 

At the workshop, experts also highlighted roles of insurance brokers. An insurance broker bridges insurance policyholders with insurance companies, represents clients to arrange a suitable insurance plan, supports clients to prepare claims documents and presents clients to negotiate directly with insurance companies. In many developed countries, insurance deals via brokerage houses and independent brokers account for 90 per cent of market share. In Vietnam, insurance transactions via brokerage accounts for only about 17 per cent. Particularly, no deals are reached with the presence of independent brokers.

 

Ms Vu Thi Phong Chau, a representative at Marsh Vietnam, said Vietnam’s nonlife insurance market now has 29 insurers and 2 reinsurers. Bao Viet Holdings is the largest insurer with a market share of 23.64 per cent, followed by PVI with 20.57 per cent, Bao Minh with 10.32 per cent, and smaller insurers like PTI, GIC and AAA with less than 10 per cent each. With many participants on the non-life insurance market, differences in premiums, terms and quality are unavoidable. The role of insurance broker is to advise clients to opt out optimal insurance plans and avoid risks in the future. Theoretically, an insurance market with the presence of brokers transaction will promote fair and orderly competition, reduce insurance disputes, prevent law violations in business activities, and promote the development of the insurance market., said Vietnam’s nonlife insurance market now has 29 insurers and 2 reinsurers. Bao Viet Holdings is the largest insurer with a market share of 23.64 per cent, followed by PVI with 20.57 per cent, Bao Minh with 10.32 per cent, and smaller insurers like PTI, GIC and AAA with less than 10 per cent each. With many participants on the non-life insurance market, differences in premiums, terms and quality are unavoidable. The role of insurance broker is to advise clients to opt out optimal insurance plans and avoid risks in the future. Theoretically, an insurance market with the presence of brokers transaction will promote fair and orderly competition, reduce insurance disputes, prevent law violations in business activities, and promote the development of the insurance market.

In Vietnam now, although there are no independent brokers, there are insurance brokerage companies like world-acclaimed Aon Vietnam, Marsh Vietnam and JLT. As a world-leading insurance broker and risk consultant, Marsh has been present in Vietnam since 1994. Currently, Marsh Vietnam specialises in providing insurance services and overall risk management in all industries and throughout Vietnam. Marsh has over 50 consultants in Vietnam assigned to design and apply innovative solutions, risk management and insurance plans help clients turn risks into opportunities and succeed in the dynamic market of Vietnam.

 

Ms Duong Thi Ngoc Phuong, Deputy General Director of Marsh Vietnam Co., Ltd, said insurance brokerage is not very developed in Vietnam mainly because businesses are worried about direct prices with insurers and prices via brokers. Relieving this concern of businesses, she explained that the insured do not have to pay any fees in comparison with direct insurance because expenses of brokers are paid by insurers

Remarking on development prospects of Vietnamese insurance brokerage market, she believed that brokerage companies will develop faster and more multinational brokerage houses will be present in Vietnam soon. Especially, with the development of market, businesses’ awareness of insurance brokers’ roles are increasingly enhanced. This is a favourable condition for this business to thrive.