Mixed fortunes remain in insurance segment

According to data released last week by the Ministry of Finance, Vietnam’s insurance sector generated an estimated premium revenue of $5.07 billion in the first seven months of 2024, reflecting a decrease of 2.21 per cent compared to the same period last year. Despite this dip, insurance payouts surged to $1.97 billion, representing a significant on-year increase of 25.06 per cent.

PVI is deepening its presence in the global insurance arena, Photo Le Toan

While the overall industry revenue declined, the non-life insurance segment demonstrated remarkable resilience. In the first half of 2024, the non-life sector experienced an estimated growth of 11.23 per cent, in stark contrast to the 9.8 per cent decline in the life insurance sector. This performance underscores the sector’s ability to navigate market challenges and maintain growth momentum.

Corporate financial reports from the first half of 2024 reveal that non-life insurance companies saw increases in both revenue and profits, with some firms achieving double-digit growth. PVI Insurance led the non-life sector, posting a total revenue of $480.64 million, a 65.7 per cent increase from the previous year. The company’s pre-tax profit reached $20.08 million, marking a 42.6 per cent on-year rise.

In late March, PVI received approval to increase its charter capital to $140 million. A PVI representative said the capital increase will enhance the company’s financial capacity, facilitating the expansion of its operational network.

“This strategic move also positions PVI to deepen its presence in the international insurance market. Our robust growth was further supported by the launch of new insurance programmes through e-commerce partnerships and innovative products such as emergency car rescue insurance and supplemental health insurance,” the representative added.

Other non-life insurers also reported positive results. Military Insurance Corporation recorded gross written premiums of $103 million in the first half of 2024, a 6.1 per cent increase on-year, with total profits rising by 9.5 per cent to $7.06 million.

Similarly, Petrolimex Insurance Corporation achieved an after-tax profit of over $6.28 million, up 4.1 per cent on-year, with net revenue from insurance operations increasing by 12 per cent to more than $71.8 million. Bao Minh Insurance Corporation reported an after-tax profit exceeding $6 million, a slight 2 per cent increase on-year.

The involvement of foreign shareholders in several non-life insurance companies is expected to inject new growth synergies into the sector, driving stronger business results. For instance, DB Insurance, a subsidiary of South Korea’s DB Group, holds a 75 per cent stake in BSH and a 35 per cent stake in both PVI and Aviation Insurance Corporation (VNI). This investment provides financial backing and introduces advanced management practices, technology, and strategic insights.

As a result, VNI reported gross written premiums of nearly $1.9 million in the first half of 2024, representing a 24.3 per cent on-year increase – double the overall market growth rate. VNI’s pre-tax profit surged by 161 per cent compared to the same period in 2023. At BSH, the involvement of foreign investors is similarly expected to help the company regain growth momentum, serving as a catalyst for market expansion, technological advancement, and service quality improvement.

Furthermore, Vietnamese non-life insurers are increasingly forming alliances to enhance their capacity to meet high customer demands.

In July, a consortium of insurers led by Bao Viet Insurance Corporation signed a cooperation agreement with HBRE Group to provide insurance services for Vietnam’s first and largest offshore wind power project in Vung Tau, with a total investment of $2.4 billion.

However, alongside these positive developments, the non-life insurance sector faces significant challenges, particularly in the bancassurance model.

A senior representative from one of Vietnam’s top five non-life insurance companies shared with VIR insights into these issues, stating the sales model is encountering numerous difficulties. “The foremost challenge is the limited public understanding of insurance in Vietnam. The biggest hurdle in bancassurance is the general lack of awareness about the value of insurance,” he explained. “This challenge is further exacerbated by recent negative sentiment towards life insurance products sold through banks, leading to increased scepticism towards non-life insurance products offered via the same channels.”

Another obstacle is the incomplete legal framework governing bancassurance, as the legal guidance for selling insurance through banks is still not fully developed, the representative pointed out.

Although the revised Insurance Business Law took effect in 2023, gaps remain, and the new Credit Institutions Law, effective from this July, lacks necessary guidelines, causing complications in implementation.

The representative also highlighted the limited range of products available through bancassurance.

“The bancassurance channel needs to offer a broader variety of products to drive growth and better protect customers. There are also issues with some bank staff pressuring clients into purchasing insurance rather than providing genuine advice. This practice has harmed the reputation of both the insurance and banking industries,” he commented.

In the same vein, Nguyen Ngoc Thanh, CEO of insurance consultancy F.I.S Vietnam, clarified that the new bancassurance regulations should be seen as conditional sales rather than a complete ban.

“The rule prohibiting banks from linking non-compulsory insurance sales to banking services is vague and urgently needs detailed guidance. Prolonged uncertainty could then result in significant financial losses for banks and insurance companies,” she stated.

Vietnam life insurance payouts surge 35 per cent to $1.24 billion in H1 Life insurers in Vietnam disbursed $1.238 billion in claims in the first half of 2024, marking a 35 per cent increase on-year.

Non-life segment leads the pack in insurance gains The life insurance segment in Vietnam is struggling amid a confidence crisis, while non-life insurance has exhibited robust growth and lured in foreign investment.