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|Insurers hail health and tech awareness, illustration photo|
By the end of August, total assets in the insurance market were estimated at $27.9 billion, up 22.1 per cent over the same period last year. In which, non-life insurance businesses were estimated at $4.4 billion and life insurance businesses’ total assets at $23.6 billion, cited the Ministry of Finance (MoF). Similarly, total insurance premium revenues in this period also increased by nearly 17 per cent.
In a more detailed assessment from the MoF’s Department of the Insurance Supervisory Authority (ISA), insurance revenues in the first five months of 2021 recovered strongly compared to the same period last year.
The loose social distancing after the first outbreak created favourable conditions for insurance selling activities. Fierce competition continued to narrow market shares among the top five insurers while creating more opportunities for smaller players.
The competition among the sector has become fiercer. In the first six months of 2021, Bao Viet Life still led the market with 20.4 per cent in terms of premium income, while Canada-backed insurer Manulife rose to the second position with 19.1 per cent market share, surpassing Prudential of 16.3 per cent. Dai-ichi Life ranked fourth, holding 12.2 per cent market share, while AIA and MB Ageas held 10.8 and 3.2 per cent, respectively. Other insurers were holding more than 2 per cent of the market’s total premiums including Chubb Life, Hanwha Life, Generali, Sun Life, FWD, and Aviva.
One of the driving forces for Manulife’s continuous growth is that it had cross-selling insurance contracts with private banks that have large customer data such as ACB, TPBank, SCB, and Techcombank, along with reputable foreign banks such as Shinhan Bank and ANZ.
“Investment-linked insurance once again dominates new business premium revenues. Investment-linked insurance products posted a growth rate of 77.7 per cent on-year as life insurers continued to promote this product in the context that government bond yields continued to decline in H1/2021,” the ISA noted.
According to Tam Phan, analyst at Viet Dragon Securities, in the context of strict and prolonged social distancing since mid-July, insurance sales are likely to slow down in Q3 before recovering from Q4 thanks to widespread vaccinations.
“Strict social distancing measures could lead to a weakening in insurance revenues (of both life and non-life) growth drivers in Q3, such as businesses shutting down on a large scale. Moreover, for businesses that are still operating at low capacity, high input prices and spending on infection prevention are eroding profits and thus, incomes of workers decrease, leading to cuts on non-essential needs, including insurance,” Phan said. “Last but not least, delays in government public investment programmes have also taken a toll on insurance sales.”
In terms of product mix, as the low interest rate environment is likely to persist after the pandemic is contained to support the economic recovery, investment-linked insurance is predicted to lead the growth of new life insurance business premiums. Meanwhile, healthcare insurance is the main growth driver of non-life insurance, encouraged by people’s improved awareness of unexpected and serious health risks like the pandemic, Phan noted.
Ngo Trung Dung, deputy general secretary of the Vietnam Insurance Association said, “Although the Vietnamese insurance market is highly competitive, there is still plenty of room for development and the digital transformation is one of the most critical elements. This sector will witness a drastic transformation when there will be more distribution channels as well as new and friendly-user products, such as managing insurance contracts and claiming insurance benefits.”
To develop this market, the MoF said it would continue to closely monitor the activities of insurance businesses, especially in the context of the outbreak to ensure maximum benefits for customers.
According to data provider GlobalData, Vietnam’s life insurance industry is forecast to grow from $5.6 billion in 2020 to $16.3 billion in 2025 in terms of gross written premiums. The industry is expected to maintain an annual growth rate exceeding 20 per cent, driven by increased awareness and digital transformation in the industry.
Ashish Raj, insurance analyst at GlobalData, added, “Early resumption in business activities following the restrictions created a stable business environment for local enterprises, including insurance companies in 2020. Despite Vietnam registering a low economic growth of 2.92 per cent, the domestic life insurance industry grew by 21 per cent in 2020, driven by low penetration and an emerging middle class with rising disposable income.”