Sector makes every post a winner

Mr Takashi Fujii

Good news has continuously come to Vietnam's life insurance sector since early 2010. Following better-than-expected business results in the first half of the year, market research and information analysis companies have released positive market forecasts. VIR's Thai Hien talks with Dai-ichi Life Vietnam chairman Takashi Fujii about the market situation.

According to Association of Vietnamese Insurers’ incomplete data, premiums from new businesses continue to surge by over 20 per cent in the first half of 2010. It seems that after the hic-cup in 2008, the life insurance sector has gained back its momentum?

I think so. First half of 2008 was not a good period for the financial industry in general and life insurance sector in particular. However, since mid-2009, the life insurance sector has performed a bit better than other sectors.

Of course, life insurance was pushed by the whole economy recovery. But, I want to stress that economic crisis really helped improve people’s awareness of risks. People have greater demand for protection and that is life insurance’s prime feature.

From a wider perspective, life insurance products have been becoming more competitive to other investment channels such as the stock market. Bigger gain prospects go together with bigger risks and we can say life insurance is a safe option. That’s why I am saying that life insurance is glittering again.

From our observation, the total amount of money from new policy is expanding faster than the total number of new policies. Is this a future market trend?

In fact, the market has followed this trend over the past few years. First half of 2010’s data, I think, once again reflected this development. From a very simple point of view, the average policy value of new policies is raising at a faster pace than number of policy and this demonstrated improving belief of people on life insurance sector.

When a customer finds life insurance more reliable, he is ready to buy an insurance policy with larger value.Last June, for instance, Dai-ichi Life Vietnam issued a policy with total claim up to VND15 billion ($789,000) to a policy holder in Ho Chi Minh City, our largest policy so far.

I think local life insurers in general and Dai-ichi Life Vietnam in particular have done well in product designing. Since 2010, local life insurers have continuously developed new products with distinctive features. Appropriate product is the prime reason for life insurance sector’s growth.

I think that the number of new policies is one of the most important business objectives of any life insurance business?

You are absolutely right. New policy growth rate shows how well a life insurance company attracts new customers. It should be noted that at the moment, less than 10 per cent of Vietnam’s population is covered by life insurance policies. Thus, taking on new customers is very important for a life insurer. It would secure the business development in future.

Different from early stage of market development, life insurers now actively expand distribution channels to provinces out of the country’s largest cities. Should we understand that there is now limited room for growth in large cities?

I think that the rationale behind this development was that local life insurers needed to expand their customer bases. As I have said new policy growth rate is very important.

When a person planned to buy life insurance, of course, he wanted to have a protection. However, with different financial background, customers may want to have different levels of protection. However, with a forward thinking, once a life insurance company takes good care of customers, they will not leave life insurance.

By then, the value of policy will increase over time in tandem with the customer’s wealth. Vietnam is one of the fastest growing economies in Asia and the country has maintained its growth pace for long time. Together with macro economic growth would be people’s income. That’s why Dai-ichi Life Vietnam continues expanding its distribution channel.

In distribution channels, sale agents are the most important force. However, different from other developed economies, life insurance agency is still not considered as an attractive occupation in Vietnam. Is this a big challenge to life insurers?

Not really. In fact, the awareness of sale agents has been improved a lot over the past years. However, the training of this force should be carried out more thoroughly.

From our view, training process consists of three segments: providing needed knowledge, training on sales technique and finally management skills.

These factors would make good life insurance sale agents.