Vietnam boasts huge growth potential for insurtech

According to the latest report “Vietnam insurtech: Navigating challenges and capitalising on emerging opportunities” released by FiinGroup on February 21, the burgeoning tech-driven insurance landscape in Vietnam is swiftly progressing, disrupting the entire insurance sector. The number of insurtech firms has accelerated since 2018, and the net revenue of these players achieved an extraordinary CAGR of 255 per cent from 2018 to 2022.

Vietnam is embracing the huge growth potential for insurtech thanks to its modest insurance penetration rate and growing demand, capitalising on tech-powered inherent advantages as a suitable choice for customers who prioritise swift insurance purchases and actively seek insurance updates. The aftermath of the 2023 Vietnam insurance scandal has underscored the weaknesses in the traditional insurance value chain, prompting a reevaluation in customer demand for insurance consultation and product quality.

The report pointed out that insurtech plays a dual role, simultaneously supporting and challenging traditional insurance companies by providing diverse insurance solutions for both industry players (B2B model) and end-users (B2B2C model).

The predominant focus of insurtech in Vietnam lies in non-life insurance products, while a few companies, such as Momi, cultivate the life insurance segment primarily in the form of investment-linked insurance. The government aspires to achieve a life insurance coverage rate of 15 per cent for the population by 2025. Nevertheless, the current figure hovers just above 10 per cent, indicating moderate progress and leaving room for the introduction of “new insurance” initiatives.

Despite significant growth potential, insurtech in Vietnam faces numerous obstacles, including limited funding and resources, heavy dependence on traditional insurance firms, low brand awareness and trust among middle-aged and older customers, data privacy concerns, and an incomplete regulatory framework.

Given emerging challenges, insurtech will prioritise service models that complement and support the operations of traditional insurers over the next 3-5 years.

In addition, insurtech will continue to boost sales with embedded insurance offerings for customers during their shopping journey within multi-million user platforms or superapps (such as Momo, Viettel Money), e-commerce platforms, and telecommunications network operators (Viettel, VNPT).

The Vietnamese insurance industry, including the insurtech market, is still in its nascent stages, with ample room for growth. Tailoring products for diverse demographics will offer a strategic approach for long-term growth.

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