The year 2021 marks the strong growth of the life insurance industry in Vietnam, with total premium revenue in 10 months reaching 123,592, up 23.4% over the same period in 2020. The market share mainly belongs to big names such as Manulife (24.1%), Baoviet life (12.8%), Prudential (12.7%), Dai-ichi (12.2%), AIA (8.1%), MB Ageas (7.3%).
Total insurance premium revenue of the whole market in the first 10 months of the year was estimated at 170,837 billion VND, up 15.68% over the same period in 2020.
Below are three notable aspects of Vietnam’s insurance industry in 2021:
In 2021, the world continued to witness damage from natural disasters in many places, with increasing scale and frequency. Along with the impact of the COVID-19 pandemic, the claim premiums of major insurance companies in the world reached a record. Disputes in the insurance industry, related to hospital support and compensation also increased. However, the pandemic also presents an opportunity for change and innovation for life insurers.
In Vietnam, the potential of the insurance market is still very large. Given the size of the life insurance market in Vietnam, the number of valid policies is estimated at 13,179,589, equivalent to only 13% of the population. Meanwhile, this rate in developed countries such as the US, UK, and Japan is 90%, Singapore is 80%, and Malaysia is 50%.
Insurance distribution and strategic cooperation are no longer exclusive to banks. Because of the strong growth of e-commerce in the context of COVID-19, insurance companies consider this a potential address to introduce and distribute products.
Non-life insurance companies also signed strategic cooperation contracts with telecommunications units to provide customers with the best information and products. Military Insurance Corporation and Viettel Post Joint Stock Corporation have signed a comprehensive cooperation agreement, with the expectation that the wide sales channel of Viettel over Vietnam will effectively support the distribution of MIC products.
In 2021, although the signing of strategic cooperation contracts, exclusive distribution between insurance companies and banks was no longer as exciting as in 2019-2020, there was a notable deal between Vietnam Maritime Commercial Joint Stock Bank and Prudential Vietnam Life Insurance Company Limited. Currently, the bancassurance channel contributes nearly 30% to total life insurance revenue.
On August 31, 2021, the Ministry of Planning and Investment officially updated the market access conditions for 59 industries with conditional market access for foreign investors, including the insurance sector. Accordingly, there is no limit to the percentage of foreign investors' ownership in the insurance business.
With the updated legal regulations, insurance companies’ difficulties in expanding room for foreign investors were solved. They showed clear interest in increasing owner share for foreign investors.
The Department of the Insurance Supervisory Authority under the Ministry of Finance forecasts that key indicators in the insurance market will maintain double-digit growth in 2022, despite the complicated developments of the Covid-19 and the challenges that will face the economic recovery process.
The agency forecasts that the total assets of the insurance market in 2022 will reach 808,908 billion VND, up 13.93% over 2021. Investment back into the economy is estimated at 677,036 billion VND, up 17.32 % compared to 2021. The total insurance reserve is estimated at 533,758 billion VND, up 17.15% compared to 2021.
The total equity of insurance companies in 2022 is estimated at 165,069 billion VND, up 8.25% compared to 2021. Total insurance premium revenue is estimated at 253,730 billion VND, up 18.04% compared to 2021. The payment of insurance benefits in the year was estimated at 58,291 billion VND, up 17.61% over the same period in 2020.
Total insurance premiums arranged through insurance brokers are estimated at 14,513 billion VND, up 14.15% compared to 2021. Business revenue of insurance brokerage businesses in 2022 is estimated at 1,107 billion VND, up 11.8%.
Similarly, the Analysis Center of SSI Securities Company (SSI Research) forecasts that sales of insurance products will recover well in 2022, with the scenario of the economy opening up strongly in the second half of the year.
In addition, this agency expects that the electronic insurance certificate (E-insurance), which will gradually be legalized for insurance products, including health insurance, property damage insurance, cargo insurance, will promote sales through online channels.
In addition, the cooperation between insurance companies and insurtech companies to enhance innovation in big data analysis will also help insurance companies diversify products and distribution channels in the future.
SSI Research forecasts life insurance premium revenue in 2022 is estimated to increase by 22-24% compared to 2021. Non-life insurance premium revenue will reach 8-10% – lower than the pre-Covid-19 growth rate. Total insurance premium revenue is forecasted to reach 256,000 billion VND, up 18-20%.
Source: nhadautu.vn, The Saigon Times
Compiled by VietnamCredit