Vietnam’s non-life insurance market expected to fare better than regional peers

Vietnam’s non-life insurance market is expected to continue to grow and fare better than many regional peers

The Best’s Market Segment Report titled “Market Segment Outlook: Vietnam Non-Life Insurance,” states that AM Best expects Vietnam’s non-life insurance segment to continue expanding, albeit at a modest pace in view of the challenging economic backdrop over the short term.

Health and personal accident insurance are likely to remain the primary growth drivers as the COVID-19 pandemic raises public awareness on health and mortality risks. However, this could be offset by a deceleration in group health insurance as domestic industries and businesses implement cost-cutting measures.

Despite its early success in containing the spread of COVID-19, Vietnam was dealt a major blow during the second half of 2021 with its worst infection outbreak. Consequently, the General Statistics Office of Vietnam estimated a 6.2 per cent decline in GDP during the third quarter of 2021, which was the first negative period of growth since 2000.

As a result of the recent disruption, the International Monetary Fund recently lowered its 2021 GDP forecast for Vietnam to 3.8 per cent. Although the severity of movement restrictions has abated somewhat since October 2021 and businesses have started to re-open, AM Best expects a bumpy economic recovery for Vietnam over the near term.

AM Best still expects Vietnam’s non-life market to fare better than many regional peers, with longer-term economic and insurance industry growth likely remaining robust. Despite the setback from the pandemic, the country’s economic fundamentals remain sound.

These include a large and young population, an emerging middle class and a growing economy. Moreover, the country remains significantly underinsured, as reflected by its low insurance penetration rate of less than 1 per cent for non-life insurance, which highlights ample opportunity for insurance growth.