Illustrative image (Photo: Bao Viet) Data from the Vietnam Insurance Association reveals that non-life insurance andhealth insurance comprised the largest proportion of the insurance industry'spremium revenue last year, accounting for approximately 33.2%, with revenue of 22.41trillion VND.
This represented a 24.3% increase from the same period in 2021.
In the meantime, vehicle insurance generated a revenue of 18.1 trillion VND,comprising 26.8% of the overall market revenue and witnessing an 11.9% growthrate over the same period in 2021.
Health and vehicle insurance products are expected to continue to increasethis year, especially when the awareness of people and economic organisationsabout the role of insurance continues to be improved.
Regarding health insurance, the country’s ageing population structure andrising middle class are driving the non-life insurance market to develop.
According to analysts of the DSC Securities Company, despite highinflation, rising prices of goods and medical expenses, and increasingcosts due to the pandemic’s consequences on people’s health, the compensationrate is forecast to keep stable under competitive pressure, thereby attractingpeople to participate.
For vehicle insurance, the potential growth is high as the trend of travellingby car is increasing thanks to the rising demand from the middle class and theMinistry of Transport’s direction to limit motorbikes.
According to experts, though the health and vehicle segments' profit margin isquite low at 60% and 62% on average, respectively, most non-life insurers stillfocus on promoting the segments, which is reflected in the high retention rate,averaging over 80% due to the potential for exploitation.
Vietnam’s insurance industry is expected to keep growing this year, buoyed bythe country’s 6.5% GDP growth forecast.
Under Vietnam’s insurance market development strategy for 2030, the averagerevenue growth rate of the insurance industry in the 2021-25 period is 15% peryear and will reach 3-3.3% of GDP in 2025.
The growth rate will be 10% per year in 2026-30 and will reach 3.3-3.5% ofGDP in 2030.
In 2023, the Ministry of Finance expects the average growth rate of totalassets, total investment, and total revenue of insurance firms to increase byabout 15% compared to 2022.
With the Government’s development orientations and the new Law on InsuranceBusiness in force from January 1 this year, the growth of most insurancesegments is expected to continually depend more on the number of new policiesof insurance companies.
The new Law on Insurance Business includes many notable changes, such asinsurers being allowed to design and deploy insurance products independentlywithout the Ministry of Finance’s approval and removing the ceiling withmicroinsurance to ensure a balance between premiums and risks.
The new law does not allow insurers to invest in real estate unless they set upother firms, which is expected to support the development of a transparent andefficient insurance market.
However, DSC noted though the new law will have a positive impact, it will notbe clear in 2023.
Meanwhile, analysts of SSI Securities Company believe under the new law,insurance companies will further promote microinsurance products.
Bao Viet Insurance Corporation, Military Insurance Corporation, and Post andTelecommunication Insurance Corporation have so far promoted implementingmicro-insurance products related to illness, cancer and accident risks, andeducational supports, with low costs./.
VNA
