Total Insurance Premium Payments of 5.3 Trillion Won Last Year... 24% Increase
State-Owned Enterprise BaoViet Closely Chasing Top Canadian Company
Only 8% Population Enrolled... Growth Trend Expected to Continue
[Asia Economy Hanoi Correspondent Jo Ara] With increasing interest in health and disease prevention, Vietnam's life insurance market is showing rapid growth.
According to local media on the 29th, the Vietnamese Ministry of Finance recently reported that last year, the total insurance premium payments in Vietnam reached 106 trillion VND (5.3636 trillion KRW), a 24% increase compared to the previous year. This figure is 2.8 times higher than that of 2015.
The Vietnamese insurance market has grown sharply over the past 10 years. From 2012 to 2017, the average growth rate of Vietnam's insurance market was 21.4%, higher than the Philippines (14.4%) and China (14.4%).
As the insurance market grows, companies are aggressively competing to capture market share. The Canadian insurer Manulife recently led the market with a 17.8% share based on new contracts, followed by the Vietnamese state-owned insurer Bao Viet with 16.5%, and Prudential Life with 15.8%. In particular, Manulife is focusing on bancassurance, selling insurance products through banks. To this end, in 2017, it signed an exclusive contract with the Vietnamese bank Techcombank. In 2019, the number of bancassurance contracts increased by 180% compared to the previous year, with pre-tax profits reaching 1.2 trillion VND. This accounts for 17.8% of total revenue.
Bao Viet is the only state-owned insurance company in Vietnam, with the Ministry of Finance holding a 65% stake. Instead of bancassurance, the company employs 2,500 sales agents and conducts insurance sales through traditional methods. Although the proportion of new contracts declined by 4.4% from 2016 to last year, sales in the first half of this year increased by more than 10% compared to the same period last year amid the COVID-19 pandemic.
Experts expect the growth trend of the Vietnamese insurance market to continue. According to the Vietnam Insurance Association, only 8% of the total population has life insurance. Stakeholders evaluate that there is great growth potential due to the very low life insurance subscription rate. Additionally, as the middle class rapidly increases, interest in health is also rising. The World Bank predicts that by 2026, the proportion of the middle class in Vietnam's population will reach 26%, double the current level.
The average insurance premium in Vietnam is about USD 30, which is far below the global average of USD 595. This is less than half of the Southeast Asian average of USD 74.
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