Insurance firms to bounce back in 2024

June 17, 2024 | 15:24
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A recent survey conducted by Vietnam Report between May and June found that a remarkable 45.6 per cent of insurance firms expect the insurance industry to grow nearly 5 to 10 per cent in 2024. Nearly 32 per cent of surveyed firms believe the economy will maintain a stable growth rate of 5.5 per cent.


Insurance firms to bounce back in 2024

The economic stability should create a favourable business environment for insurance businesses. As confidence improves in the market, businesses and individuals are willing to spend more on insurance products.

The Insurance Supervisory Authority under the Ministry of Finance (MoF) predicts that the industry's total assets are estimated to reach VND1 quadrillion ($39.3 billion) for 2024, reflecting an impressive on-year growth of 9.97 per cent. The insurance industry is also expected to contribute positively to the overall economy this year through an estimated investment capital of VND850.3 trillion ($33.4 billion), an increase of 11.5 per cent on-year. Total insurance premium revenue is expected to hit VND243.5 trillion ($9.6 billion), of which non-life insurance should see a 12 per cent bump and life insurance 5 per cent.

The insurance penetration rate, calculated by insurance premiums per GDP, is only 2.3–2.8 per cent in Vietnam. This figure is much lower than the average rate of 3.35 per cent in ASEAN, 5.37 per cent in Asia, and 6.3 per cent globally. Consumer awareness of insurance is not high, while the average income is still modest in comparison to wealthy nations. This indicates that there is still a great deal of untapped potential in the market.

Vietnam Report states that the mis-selling scandals that undermined public confidence in 2023 will persist this year. As a result of these scandals, consumers lost faith and became cautious when purchasing insurance products. Meanwhile, the reputations of some insurance brands have been badly affected.

According to the Insurance Supervisory Authority, premium payments decreased by 8.3 per cent in last year compared to the same period in 2022, driven by a decline of 12 per cent in life insurance and 2.4 per cent in non-life insurance. This was the first time in two decades that life insurance recorded negative growth.

The rate of cancellation and termination of insurance policies after their first year of issuance is about 20–30 per cent. The figure was up to 73 per cent for bancassurance following its scandals. These alarming figures are likely to reflect the unsustainable development of the market eventually.

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Insurance companies performed well in Vietnam during the COVID-19 pandemic, but their shares have not attracted much attention from investors.

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After a decade of consistent growth, Vietnam’s insurance industry is now undergoing a period of adjustment. The total insurance premium in 2023 fell by 8.4 per cent to $9.5 billion, with the life insurance sector experiencing the most significant on-year decline at 12.5 per cent.

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Vietnam’s life insurance industry, noted for its stringent regulations, should enhance product quality, transparency, and stakeholder balance for sustainable development, industry leaders have urged.

By Vy Bui

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