Marsh ends 10 year wait to enter local insurance market

Marsh received a 50-year operating licence from the Ministry of Finance (MoF) last Friday, becoming just the third 100 per cent foreign-owned insurance brokerage to set up shop in Vietnam.
The MoF granted Marsh the licence one week after New York Life, the largest life insurance group in the US, withdrew its licence application after waiting for more than four years.
Erin Pham, senior official and representative of New York Life International in Ho Chi Minh City, told Vietnam Investment Review that the company had pulled out of the Vietnamese market to “refocus resources in the international market”.
“We are leading in several markets and we want to expand our investment in other markets such as China, Mexico and Thailand, which represent further opportunities,” Pham told VIR.
Pham said that the company had been waiting in Vietnam for several years and had shown a commitment to the market.
“But we understand that we are not able to receive a licence right now, while our resources can be used in other international markets,” she said.
Le Quang Binh, head of the MoF’s Insurance Department, told VIR that Marsh would be allowed to operate in the country’s foreign-invested sector, acting as an intermediary between foreign investors in Vietnam and international insurers.
“Insurance brokerage in Vietnam has yet to be fully developed. The role of insurance brokerage is not fully recognised. The presence of one of the leading insurance brokers would be a great boost to the market,” he said.
Marsh was unavailable for comment on the matter.
Vietnam already has five other insurance brokerage companies. Of these, two are 100 per cent foreign companies and three are local joint stock companies.
In June 2003, France’s Gras Savoye became the first foreign insurance broker to receive a 100 per cent foreign-owned operating licence in Vietnam.
Earlier this year, the government allowed Aon Inchinbrok, formerly a joint venture between BaoViet and the American company Aon, to part ways with its Vietnamese partner and become a 100 per cent foreign brokerage company.
The domestic brokerage sector earned about $2 million last year, with brokers normally charging commissions of between 10 and 15 per cent of the total value of the insurance contract.
Vietnam’s non-life insurance market is projected to grow 38 per cent to VND 5.5 trillion ($353 million) this year [2004 or 2005???], according to MoF.
Three other American insurance companies are awaiting licences in Vietnam: AIG (American International Group) and Liberty Mutual in the non-life insurance sector, and Ace International in the life insurance sector. Another foreign broker, British company Jardines, is also awaiting a licence.