Insurance industry hits growth of 24% in H1

Deputy General Director of the Ministry of Finance’s Insurance Supervisory Authority (ISA) Doan Thanh Tuan said besides maintaining a high growth rate, the financial status of insurance firms also improved in the first six months. Their total assets rose an estimated 27.33% on-year to almost VND337 trillion (US$14.9 billion).

During the period, insurance companies re-invested VND277.38 trillion (US$12.2 billion) into the economy, marking an on-year rise of 27.47%, Tuan said, adding that insurers also paid out VND16.32 trillion (US$719 million) to customers, up 22.43% compared with the same period last year.

He said that ISA would step up its efforts to restructure the insurance market in the remaining months of the year, aiming at transparency, safety and efficiency.

This year, the insurance sector has targeted revenue of VND129.24 trillion (US$5.7 billion), up 22.38% against last year. If it hits the target, it would be the fifth consecutive year the insurance industry has posted annual growth of more than 20%. The industry’s total revenue surged by 21.2% to VND105.61 trillion in 2017 (US$4.6 billion).

Phung Ngoc Khanh, the ISA’s general director, said that Vietnam’s insurance market had high potential as the number of customers remained low while incomes and awareness were rising. 

The insurance industry is also expected to benefit from the country’s projected GDP growth of more than 6% annually over the next three years.

It also has great potential as the country has one of the world’s lowest life insurance penetration levels at less than 1% of the GDP. The average insurance premiums in Vietnam stand at US$30, much lower than the global average of US$595 and Southeast Asia’s US$74.

Many insurers, such as Generali and Prudential, have recently decided to increase their charter capital and expand their business operations as they forecast the market will grow.

The Vietnam Insurance Association reported there were 18 life and 30 non-life insurers in the Vietnamese market. Among the 18 life insurers, only Bao Viet Life Insurance is Vietnamese owned, while the remainder were joint ventures or wholly foreign-owned companies.

According to experts, the participation of foreign investors in Vietnam’s insurance market would develop the market while enriching domestic insurers with experience and governance.

In addition, modern distribution models in the local insurance industry had been gradually developing thanks to the participation of foreign investors.

“The participation of foreign investors has helped domestic insurers increase their competitive edge through the enhancement of training and diversification of products,” Bao Viet Securities Company noted in a report.