Vietnam Insurance Market Lucrative to Foreign Firms

Vietnam with robust economic growth and great potential for further development is amongst the most attractive destinations to foreign insurers who are striving to move part of their activities from the two giant markets of China and India, said Life Insurance International, US prestigious insurance magazine.

 

The Vietnamese economy is posting a high economic growth rate which only China and India were previously expected to be able to reach, reported the magazine, citing the country’s GDP growth of 8.4 per cent last year, one and a half higher than 2001.

 

Vietnam has a population of 82 million people of which 60 per cent is aged under 30. Local people’s saving habit is just a factor that makes the Vietnam market attractive.

 

In 1993, insurance revenue accounted for 0.4 per cent of Vietnam’s GDP and such a figure rose by 1 per cent in 2005. The Ministry of Finance expected insurance revenue would make up 4.2 per cent of the national GDP in 2010.

 

According to the Vietnam Insurance Association, the country has 120,000 insurance agents and 10,000 employees in this insurance sector, including 16 non-life insurance companies, eight life-insurance companies and seven insurance brokerage companies.

 

Life insurance companies in Vietnam currently offer some 100 products and earned some VND8.1 trillion or $511 million last year, rising by 5.3 per cent against a year earlier.

 

At present, fifteen foreign insurance companies are operating in Vietnam and 30 others have set up their representative offices here.

 

Foreign arrivals are reaping high profit. In 2002, Manulife Vietnam, the first wholly-foreign owned insurance company, became the first insurance company to earn profit here after three years of operation. In 2004, Prudential Vietnam also reported after-tax profit of $3.8 million after five years in Vietnam.

 

Meanwhile, insurance companies from Japan, who want to ease their heavy reliance on the Chinese market, also consider Vietnam as a lucrative market. Dai-ichi Mutual Life opened its representative office in Vietnam at the beginning of this year and Nipponkoa also teamed up with Bao Viet, the country’s leading insurance corporation to sell insurance products.

 

Vietnam became the fourth popular investment destination of Japanese investors in 2005 following only China, India and Thailand.

 

According to a report on Vietnam’s insurance market released by Towers Perrin, US consultant firm, that less than 10 per cent of the country’s population use life-insurance services prompts the leading growth potential in Asia-Pacific. Lack of experienced and qualified human resource as well as great capital demand in Vietnam offers attractive opportunities for foreign investors.