As the insurance industry is beginning a digital transformation journey, consumers are expected to be more open to online insurance.
|Vietnamese consumers are more open to online insurance |
The State Bank of Vietnam’s recent interest rate hike to stabilise the VND and curb inflation has not dimmed the central bank's outlook for economic growth.
Despite pandemic-related uncertainties, geopolitical instabilities, and rising inflation, the Vietnamese economy is expected to grow by 7 per cent in 2022, according to the IMF. Vietnam's insurance penetration rate remains between 2.3 per cent and 2.8 per cent, lower than in most emerging and developed markets.
However, the insurance industry is embarking on a digital transformation journey that could transform the entire insurance value chain. Experts predict a compound annual growth rate of 23.7 per cent for the life insurance market between 2020 and 2025 and 8.5 per cent for the general insurance industry between 2021 and 2026 in terms of gross written premium.
“With the goal of increasing Vietnam's digital economy’s contribution to 20 per cent of GDP by 2025, embedded insurance and micro-insurance products offer opportunities for companies looking to increase the country’s insurance penetration rate. To cope with rising costs and inflation, businesses must not only focus on improving process and system efficiencies but also on making smart investments in flexible, adaptive technologies to stay ahead of the digitalisation curve,” said Thuy Nguyen, country head of IXT Vietnam.
Insurtech company IXT on October 5 released an online quantitative study on Vietnam’s consumer profiles and purchasing behaviour. According to the findings, 94.4 per cent of respondents shopped online at least once in the previous year. This behaviour of online shopping is consistent with Vietnam's increasing internet penetration rate.
As of October 2021, Vietnam had 18.8 million fixed broadband internet subscribers and 71 million mobile broadband subscribers, according to the Ministry of Information and Communications. Over the last two decades, internet users in Vietnam have increased to 70.3 per cent of the population, out of a total population of 98.51 million.
About 46 per cent of respondents surveyed said they would buy insurance online from insurers and other e-commerce or ecosystem partners (such as Shopee, Amazon, Uber, and Grab), highlighting the growing opportunity for insurance products to be purchased through digital channels.
Respondents are most interested in purchasing the top three mainstream insurance products online: medical (16.4 per cent), life (13.3 per cent), and auto (13.0 per cent).
Duyen Dang, director of Partnerships at IXT Vietnam said, “The government has approved and released the National Digital Transformation Program, which aims to digitalise businesses, administration, and production activities. IXT's consumer research has revealed significant potential for the financial market to ride the waves of growing consumer demand online and curate personalised products and services to meet consumers' insurance protection needs.”
|IXT's consumer research report key takeaways: |
1. The most preferred communication channel is social media, echoing the prevalence of online communication in the digital era.
2. After covering living expenses, respondents would spend their disposable income in these top three categories, savings for education (10.6 per cent), travel and vacations (9.4 per cent), and real estate purchases (9.3 per cent).
3. While one-third of the respondents find insurers using their personal data to provide customised recommendations intrusive, about a quarter of the respondents think it’s thoughtful and a value-add.
4. The top three most important factors to respondents when deciding which insurance product to purchase are brand reputation (29.6 per cent), flexibility to mix and match coverage (11.9 per cent), and new, unique, or better insurance coverage (11.7 per cent).
| ||Vietnam an attractive life insurance market |
The life insurance market remains attractive despite slowing down of late, according to the Insurance Association of Vietnam.
| ||Insurers show off digital-led products |
To simplify the purchasing process, insurance companies are in a race to launch new digital products while cooperating with the banking industry and e-commerce platforms.
| ||Insurance companies urged to go digital soon |
Insurers should promote digital transformation rapidly as, compared to other financial industries, the insurance industry is considered to have slow digital transformation with limited economic efficiency.