Insurance premiums rise

The insurance industry reported premiums of more than VND23 trillion (US$1.1 billion) in the first eight months, according to the Ministry of Finance’s Insurance and Supervision Department.

The non-life sector accounted for VND13.54 trillion ($646.6 million), a 26.6 per cent rise year-on-year. Life insurance premiums were up 15 per cent.

In July, their respective growth rates were 21 per cent and 16 per cent.

Life insurance companies sold 12 per cent more policies year-on-year.

In the non-life sector, vehicle insurance accounted for the largest share of VND4 trillion ($192.3 million), or 31 per cent. Property and damage insurance accounted for 26 per cent, and health and accident insurance for 13 per cent.

Non-life insurers paid almost VND4.7 trillion ($226 million) in claims settlements.

Phung Dac Loc, general secretary of the Viet Nam Insurers Association, says development of insurance-related trades like brokerage, agency, insurance risk assessment, insurance inspection, and investigation will help the industry grow.

“Insurance companies will be able to outsource these activities and focus on their core business.

“If insurance detectives establish themselves, it will help prevent a lot of insurance fraud.”

Meanwhile, the Ministry of Finance recently issued a warning about unfair competition between insurance companies, the increase in fraud, and tortuous settlement procedures as some of the problems that hindered the industry’s growth.

Prices to rise over Tet

Prices of many goods and services may well be high during Tet (the Lunar New Year) in late January 2012 since businesses still pay high interest rates on bank loans.

The minimum rates may have fallen to 17-19 per cent, but only for companies operating in priority areas like exports, agriculture and fishing. Others still have to pay 21 – 21.5 per cent.

According to Phan Van Thien, deputy general director of Bien Hoa Confectionery Company, with interest rates at more than 20 per cent he expects the prices of his company’s products to rise by 10 to 15 per cent during Tet.

Consumption may rise by only 15 per cent against the traditional 25 to 30 per cent, he says.

But interest rate will not go down easily if inflation remains high.

At a seminar on Viet Nam’s economy in 2011 and its prospects for 2012 organised by the Economic Committee of the National Assembly and the Viet Nam Institute of Social Sciences in HCM City last week, former trade minister Truong Dinh Tuyen said interest rates could be lowered once inflation falls to single digits.

Meanwhile, the Government should divert resources from State-owned enterprises to the private sector since the former were performing poorly.

Dr Nguyen Duc Thanh, director of the Viet Nam National University’s Viet Nam Centre for Economic and Policy Research, said if interest rates could not be cut, businesses should be supported by cutting income tax by 3 per cent to 22 per cent.

Source VNS

Tags: Vietnam insurance, Vietnam insurance industry, Vietnam insurance market