Insurance Market Prepares for Int'l Integration

Insurance Market Prepares for Int’l Integration

After 10 years of development, Vietnam now has 25 enterprises and 124,600 agents engaged in insurance activities (18 life and non-life insurance, 6 intermediary and one re-insurance) under various forms : State-owned, joint stock and foreign invested enterprises. The Vietnamese insurance market continues to develop in a stable manner: turnover growth rate at 29 per cent a year, insurance fee per GDP increasing from 0.37 per cent in 1993 to 1.8 per cent in 2004.

The State-owned enterprises continue the lead in non-life insurance holding 76 per cent (Bao Viet 40 per cent, Bao Minh 24 per cent, PVIC 12 per cent). Health and accident insurance is highest with 22.33 per cent in turnover, followed by vehicle insurance of 20 per cent.

Non-life insurance is unchanged in market shares with Bao Viet holding 39 per cent, Prudential 38 per cent, Manulife 12 per cent, AIA 8 per cent, and Bao Minh CMG 3 per cent. The turnover of life-insurance over 10 years remains at 91 per cent.

In 2004, the Vietnamese insurance market continued its healthy and stable development with improved financial capacity and service quality. The total investment of the sector was VND22,933 billion, a growth rate of 60 per cent against 2003. The investment structure has shifted from short-term to long-term under the form of government bonds, direct investment in infrastructure for business activities and social welfare. The turnover of the sector was VND14,232 billion (25 per cent more than 2003), including VND7,637 billion in life-insurance (up 17 per cent), VND4,763 billion in non-life insurance (up 25 per cent), and the remaining in investment. As a result, foreign investors have highly valued the potential and business environment of the Vietnamese insurance market. This year, three more foreign insurance companies have established representative offices in Vietnam namely Cathay Life (Taiwan), Great Eastern Life (Singapore), and Ping An (China).

With high growth rate and world ranking stability, Vietnam’s insurance market has become an indispensable service providing an important contribution to socio- economic development. However, according to Mr Le Song Lai, Deputy Head of Insurance Department, Ministry of Finance, in 2005, Vietnam’s insurance market will face new challenges, especially when joining the WTO. The market share will be smaller due to the integration and higher demand of the economy. Consequently, insurance companies must be re-organised and upgraded and international cooperation needs to be intensified. 

• Giang Tu