Insurers juggle with market share shifts and moderate gains

Insurers juggle with market share shifts and moderate gains - illustration photo

Bao Viet Insurance’s total premium revenue exceeded $354.3 million by the end of November 2021, granting it the largest market share of 15.8 per cent, as cited by the Vietnam Insurance Association (VIA).

Simultaneously, pre-tax profits of PVI Insurance reached $29.9 million as of Q3 2021, rising 20.1 per cent on-year and fulfilling 161.9 per cent of the 9-month goal and 106.4 per cent of the whole year’s plan.

For the first time, PVI Insurance has reached the revenue milestone of $434.8 million in 2021, commemorating its 25th anniversary.

The southern region of Vietnam was particularly badly struck by the pandemic’s peak in the summer of 2021, which has had a substantial impact on PVI’s operations. While PVI continues to be the dominant player in the non-life insurance business, the company has maintained its position as the industry’s best performer in terms of financial performance, emphasised Nguyen Xuan Hoa, general director of the firm.

On the same note, PJICO’s pre-tax profit is expected to reach $15.2 million in 2021, surpassing the 73 per cent target and growing by more than 60 per cent from 2020.

Meanwhile, BIDV Insurance Corporation persists to be lucrative in the non-life insurance market, with pre-tax earnings expected to exceed $17.4 million in 2021, up 10 per cent from 2020.

PTI, likewise, expects to bag a pre-tax profit of approximately $13.3 million in 2021, surpassing 20 per cent of the company’s strategic objective.

Some insurers’ market share rankings and ownership structures are projected to shift significantly in 2021 and 2022, with the government’s ambition to accelerate state divestment in some insurers, such as PTI and BMI.

Some major foreign investors, such as Dongbu Insurance from South Korea, are eager to acquire a larger stake in PTI.

Data from the VIA showed that the total premium revenue of the non-life insurance market reached $221.7 million by the end of November 2021, an increase of about 2 per cent over the same period last year. Health insurance accounted for a sizable portion of total revenue (31 per cent), followed by motor vehicle insurance (27.4 per cent), property and damage insurance (13.8 per cent), and fire and explosion insurance (12.9 per cent).

Global insurance rating firm AM Best anticipates Vietnam’s non-life insurance segment to continue rising, although at a moderate pace in consideration of the adverse economic scenario over the near term.

Health and personal accident insurance are projected to be the principal growth engines as the pandemic boosts public awareness of health and mortality concerns. However, this might be countered by a slowing in group health insurance if domestic sectors and enterprises undertake cost-cutting measures, AM Best highlighted.

AM Best forecasts Vietnam’s non-life market to perform better than many regional counterparts in the near term, with longer-term economic and insurance sector development predicted to stay steadfast. Despite the impediments imposed by the pandemic, the macroeconomic underpinnings remain robust and resilient.

Bao Viet Securities, meanwhile, believed that the new insurance legislation in 2022 would generate substantial structural changes throughout the board.

“The amended Law on Insurance Business is planned to be approved in May this year and come into force in July 2023. The draft of the new legislation indicates substantial changes in market construction and supports the healthy and professional growth of participants,” the brokerage noted.

The Insurance Supervisory Authority (ISA) under the Ministry of Finance stated that it would coordinate with relevant agencies to complete the draft Law on Insurance Business (as amended) to be submitted to the National Assembly for approval at the May 2022 meeting, while also developing decrees and circulars guiding the law. Furthermore, the ISA would continue to implement the Strategy on the Development of Vietnam’s Insurance Market for the 2021-2030 period to be submitted to the government for promulgation in the following year.

The overall income from insurance premiums (both life and non-life sectors) in Vietnam is expected to reach around $1.1 billion in 2022, growing at a rate of 18.04 per cent compared to 2021, the ISA estimated. Total insurance payments are expected to reach $253.5 million, representing a 17.6 per cent increase on-year.