Life insurance still a foreign affair: AVI

Foreign companies have long dominated the local life insurance market, and the trend shows no signs of reversing, according to data from the Association of Vietnamese Insurers (AVI).

AVI’s data suggests that total life insurance premiums in 2010 reached VND13.2 trillion ($663 million). This represented a 15 per cent year-on-year increase.

Phung Dac Loc, AVI general secretary, said that continuous economic growth had paved the way for life insurance industry expansion. In 2010, the economy grew by 6.8 per cent.

“Increased incomes and new product developments have pushed the industry forward,” said Loc.

Takashi Fujii, chairman cum general director of Dai-ichi Life Vietnam, shared this view, saying that business success stories in 2010 could be largely attributed to continuous investments in the infrastructure and developing of new products to meet the increasingly diverse needs of Vietnamese customers.

Amongst the 12 operating life insurers in the market, Bao Viet Life is the only domestic player, with market shares of over 30 per cent. Vietcombank, a local banking giant, has formed a 50-50 joint venture with Cardiff, named Vietcombank-Cardiff Life Insurance. However, the market share of this joint-venture is negligible—less than 3 per cent, according to data from AVI.

“The domination of foreign life insurers in Vietnam is inevitable, as success in this industry requires not only money but also technical expertise, a clear advantage of foreign insurance giants. Two new licenses granted in 2010 once again confirmed this trend,” said Loc.

In late 2010, the Ministry of Finance granted two licenses for life insurance businesses to Taiwan’s Fubon Financial Holdings and Italy’s Generali Group.

“Our approval marks an important milestone of Fubon Financial Holdings in tapping into Vietnam’s market, as well as advancing the group’s position across Asia,” said vice chairman for Fubon Life Kenneth Shih.

Meanwhile, the authorisation from the Ministry of Finance has given the go-ahead to the procedures for the start-up of the Generali Vietnam Life Insurance Company Ltd. The company will begin operations within the next six months.

The Generali Group’s managing director, Sergio Balbinot, said that the license would give fresh impetus to the company’s expansion strategy in countries with high growth potential.

“The Vietnamese economy is second only to China in terms of GDP growth, but life insurance spending stands at barely 0.7 per cent of the GDP. In other words, we are in a market offering huge opportunities for the insurance industry. Everything is in place for Generali to become a key player in this market,” said Balbinot.

With a population of more than 85 million inhabitants, an average age of 27, an average 8 per cent GDP growth and a 15 per cent increase in insurance premiums in 2009, Vietnam is one of Asia’s most promising markets in terms of growth potential. – VIR

Tags: Life insurance