Huynh Thanh Phong
Returning to Vietnam with new roles, regional managing director of AIA cum chairman of the board of AIA Vietnam, Huynh Thanh Phong brought fresh thinking to developing strategies for Vietnam’s life insurance industry. He shares with VIR’s Song Ngoc his views about Vietnam’s life insurance market and AIA’s strategy in Vietnam.
Vietnam’s economy is going through a difficult phase. The financial sector in general is vulnerable to the economic crisis, so the life insurance industry must have suffered ?
I think life insurers should not worry too much about the crisis nor economic fluctuations in the short term. Life insurance is about meeting medium to long-term needs so life insurance companies should focus on their long-term strategy for five years, 10 years, 20 years or even longer. This is why near term economic turbulence is not a major problem. For AIA as well as other life insurance companies the recent crisis is more a temporary issue. During economically challenging times, people tend to think more about savings, and have greater need for financial security. So, difficult economic times may actually provide growth opportunities for life insurers.
But Vietnamese customers now have many financial products and services options. It seems that life insurance products are somewhat less attractive in comparison with previous years. What is your view?
Different financial products and services are designed to meet the different needs of customers. Our ultimate goal is to meet the protection and savings needs of our customers. The protection elements include life insurance, health and accident insurance. Looking at the level of coverage or the face value of insurance policies, you can see that Vietnamese people do not have sufficient protection coverage. This is not only in Vietnam. Across Asia-Pacific, people are underinsured or have insufficient protection coverage than the highly developed markets like Europe or North America.
Providing adequate protection to people is where AIA concentrates its focus, and also where we have a great opportunity to grow, as people across Asia and most especially Vietnam need more protection for themselves and their families.
On the other hand, life insurers are continuously developing new products and services to better meet the needs of their customers across different life stages. Ten years ago, life insurance products in Vietnam were basically savings for the children’s education. Over the past few years, life insurers have introduced investment related products such as universal life. These unit-link products, which are more complex, but can also better satisfy the more diverse demands of different customers. Recently, AIA Vietnam introduced pure protective products which have been warmly received by our customers.
In the context of ramping inflation, Vietnamese people may turn their backs on long-term investment vehicles including life insurance. Is there any solution to address the customers’ concerns?
As I said, it is important to understand that buying a life insurance policy is to get a medium and long-term protection, not short-term. So, life insurance is always appropriate in meeting customers’ needs.
In the context of high inflation or economic crisis, interest rates and inflation rate may go up and down. These up and down cycles may repeat over time. However, if you are saving day-by-day, on average you would be able to cope well with inflation or currency depreciation.
In Vietnam, there is still a large gap in the market share between AIA and some leading players. Do you have solutions for AIA Vietnam?
In recent years, AIA Vietnam has really been doing quite well and has been regaining its market share. When talking about market share, we need to be specific. The more important indication is profitable market share, not general market share.
Regarding future plans, we will first focus on improving our distribution system.
Five to seven years ago, developing a part-time agency force may have been the right way. They could be public employees, spending some time in the evening to introduce life insurance products to their relatives, friends or neighbours.
But as the industry has become more and more sophisticated, an agent must be able to provide detailed financial analysis of his/her customers and offer them products best suitable to their needs. In short, agents must now become real financial advisors.
From a long-term development point of view, AIA Vietnam has been focusing on building a strong team of full-time agents, premier agents, expanding our network and introducing innovative products. Additionally, strengthening the management team is also a priority for AIA Vietnam.