The insurance industry is forecast to witness great growth in 2006, which is considered the key year for the development of the sector ten years after Vietnam opened the market, state media said.
Last year, the insurance sector saw a growth rate of 8.66 per cent, higher than the rate of GDP which is reported at 8.4 per cent. However, this rate is much lower than the growth of 20.21 per cent in 2004.
This is the year Vietnam is expected to become a member of the WTO and the hindrances in the Vietnam-US bilateral Trade Agreement shall be removed. Meanwhile, many policies, which will promote insurance development, will also come into effect.
Accordingly, the insurance market is predicted to make breakthroughs with the following 11 opportunities and challenges.
1. Transporters of passengers and inflammable goods inland are forced to buy insurance policies.
2. The FDI capital of US$5.83 billion and ODA capital of $3.74 billion invested in Vietnam last year continues to be disbursed for infrastructure projects this year, which will create potentials for construction insurers.
3. The removal of all limitations on motorbike registration in Hanoi and Ho Chi Minh City late last year as well as policies on the reduction of the special consumption tax and imported automobile tax promises potentials for developing vehicle insurance.
4. The Law on Tourism has come into force from January 1, which stipulates Vietnamese people traveling abroad have to buy insurance policies.
5. The Law on Investment and the Law on Enterprises, which will take effect from July 1, 2006, regulate that enterprises have to buy insurance policies. This will create big customers for insurance firms.
6. Many industries will have strong growth following national economic growth such as shipbuilding, aviation, tourism, import and export, which will create a favorable climate to develop concerned insurance products.
7. Optional health insurance has been available since early this year and the sector will be the competitor of life insurance.
8. Banks will continue raising deposit interest rates to attract capital from people, which will also cause difficulties for the life insurance sector.
9. Roadmaps of the Vietnam-US bilateral Trade Agreement on the domestic insurance industry will be ended by the end of 2006. The insurance products coming from US firms will challenge local insurers.
10. To meet the demands of the country's WTO accession and the global integration process, Vietnam needs to further open the market to foreigners. The move will create more competition pressure on domestic insurance companies.
11. Many banks have started launching attractive services encroaching into the insurance market.
Vneconomy
Vietnamese
