HSBC partners with local insurer

David Fried, group general manager and head of insurance for HSBC Holdings PLC, arrived in HCM City last week to attend the World Economic Forum on East Asia. Viet Nam News spoke to him about HSBC’s strategy for in Viet Nam.

What is your view about the Viet Nam economy after the financial crisis?

HSBC expects that the Viet Nam economy would grow by 7-8 per cent in GDP this year. Viet Nam has come out of the financial crisis with strong positive growth. After the crisis, I think Viet Nam will have a stronger position in both economic strength and political leadership in the region. The country is experiencing greater opportunities to grow, with the world economy recovering and the positions of East Asia and emerging markets rising.

So I think very positive reflections of the Viet Nam economy are its GDP growth, improvement in trade capacity and the living standards, which have been supported with foreign direct investment coming to the country. One of the big challenges is that Viet Nam should push more for exports, especially goods with high value to meet rising demand from import markets.

What is HSBC’s strategy to develop the insurance segment in Viet Nam?

HSBC Insurance is committed to a long-term development in Viet Nam. In 2007, we entered the insurance market in Viet Nam by an investment of US$255 million to purchase a10-per-cent stake in Bao Viet Holdings – the leading financial and insurance service in Viet Nam.

In January this year, we invested another $105 million to increase our stakes in Bao Viet Holdings from 10 per cent to 18 per cent. In the future we are looking to raise our stakes in Bao Viet up to 25 per cent upon the agreement with Bao Viet and the approval of the Ministry of Finance.

We see our investment in Bao Viet as the best way to achieve long-term success. However, our investment in Bao Viet is not our only stake, as we have our strategic partnership with them.

Under this strategic partnership, HSBC will provide them with significant technical service support that will allow them to become more self-sufficient, allow them to provide better services and strengthen their governance, serve Vietnamese clients better and provide positive returns for the share holders over the long-term.

Every year since we started our investment in Bao Viet in 2007 until now, HSBC partnered with Bao Viet to introduce to the Viet Nam insurance market many bancassurance products including No-Claim Bonus Car Insurance, Anticipated Endowment Insurance, Term Life Insurance, Medical Care, Employee healthcare Insurance, Travel Insurance, Marine Cargo, Property Insurance and Keyman Insurance.

What are the challenges that HSBC Insurance encounters in the Viet Nam market?

Challenges are everywhere and in every market. In Viet Nam, the most challenging issue is the way of thinking of the Vietnamese people.

Most individuals still look at life insurance as mere savings products and compare the interest with a bank savings product like deposits. I think this should not be the way to look at insurance products.

There are insurance products, which can be considered as savings products Anticipated Endowment Insurance, Retirement Insurance. However, Insurance products cannot make up 100 per cent of your financial plan.

Each person should have a clear financial plan in which an insurance product is a part, together with other financial products like deposits and loans… Insurance products can provide you the best support both in terms of finance and risk control in challenging times. Thus you should not compare the interest/profit of insurance products with bank deposits.

It is very challenging to change the way of thinking of Vietnamese. However, the Viet Nam market has certain advantages for the insurance sector to grow, given the strong development of the Viet Nam economy, the rising living standards, a majority of workers in the population and more people becoming wealthier.

Vietnamese should pay more attention to set up their personal financial plan in which insurance can be an essential part. More over, the penetration of insurance per GDP in Viet Nam is still low, even compared to other emerging markets. This makes Viet Nam a very potential market for the insurance business to grow.

How did HSBC Insurance perform in Viet Nam during the first five months of 2010?

Last year HSBC Insurance globally provided $2.5 billion of profit, making us one of the largest profitable insurance businesses in the world and one of the world’s largest bancasurances. Of the $2.5 billion of profit that we made, 50 per cent of it came from here – the Asia market.

For the first five months of 2010, HSBC Insurance globally has done quite well. In Viet Nam, our operation, investment in Bao Viet and development in bancassurance have developed well and in the right direction. We are following closely with our business plan. The exact performance figures of HSBC Insurance for the first half of 2010 will be publicly available in our interim results. — VNS

Tags: HSBC Holdings PLC, Vietnam insurance, Vietnam insurance industry, Vietnam insurance market