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|Vietnam's life insurance industry will see steady double-digit growth in the next five years|
According to GlobalData’s Global Insurance Database, Vietnam's life insurance industry is forecast to grow from VND129.3 trillion ($5.6 billion) in 2020 to VND375.4 trillion ($16.3 billion) in 2025, in terms of gross written premiums (GWP). The industry is expected to maintain an annual growth rate exceeding 20 per cent, driven by increased awareness and digital transformation in the industry due to the COVID-19 pandemic.
Ashish Raj, insurance analyst at GlobalData, commented, “Early resumption in business activities following the COVID-19 restrictions created a stable business environment for local enterprises, including insurance companies, in 2020. Despite registering a low economic growth of 2.9 per cent, the Vietnamese life insurance industry grew by 21 per cent in 2020, driven by low penetration and emerging middle class with rising disposable income.”
Endowment insurance was the largest segment of the Vietnamese life insurance industry, accounting for 88.7 per cent of GWP in 2020. Limited savings options and an underdeveloped equities market make endowment life insurance products an attractive investment instrument as they offer guaranteed returns. The endowment segment will continue to remain popular and grow at a CAGR of 25.1 per cent over the forecast period.
Supplementary or riders, accounted for 9.2 per cent of the life insurance GWP in 2020. Increasing demand for personal accident, critical illness, disability, and health added as riders to the universal life and endowment policies makes supplementary or riders a popular product in the Vietnamese Life insurance industry. It is expected to grow at a CAGR of 9.9 per cent over 2020-2025.
Term life accounted for 1 per cent of the life insurance GWP in 2020. The segment was negatively impacted by the COVID-19 pandemic witnessing a 4.9 per cent decline in GWP in 2020. It is forecast to recover in 2021 and grow by 15.2 per cent driven by the economic recovery.
“Favourable regulatory policies to reduce administrative costs and supportive legal framework will help in increasing the transparency in the Vietnamese life insurance industry. Strong economic growth, rising disposable income, and increased awareness due to the pandemic are expected to drive the growth in the life insurance industry over the next few years," he concluded.