Life insurers swimming against the current

Despite the big difficulties in the economic downturn, life insurance companies still had a prosperous year 2010.

Mark Tucker, President and Managing Director of AIA Group, announced on March 16; that the total insurance premiums for the company in 2010, increased by 23 percent; in comparison with 2009, where it reached 961 billion dong. The company’s pre-tax profit increased by 35 percent, reaching 139 billion dong, while the stockholder equity has increased by 24 percent to 920 billion dong.

The president keeps optimistic about Vietnam’s life insurance, saying “to date, only five percent of population has taken insurance policies, while the Vietnamese population is young; which means that there is still much “room” for life insurers to exploit the market.

Director of a 100 percent foreign owned life insurance companies also said that with the current population and the economic growth rate, Vietnam promises great potentials for life insurance companies, including the ones which have just joined the market.

“The key now lies in the way of approaching the market,” he said. “The thing that enterprises which have just joined the market need to do, is to make people known and confident about them”.

The increasingly high living standards have gradually changed the awareness of Vietnamese people about life insurance. The number of people who dare to spend tens of billions dong to take insurance policies to protect themselves from troubles in life has increased surprisingly. A businesswoman in HCM City has reportedly taken an insurance policy with the value of 39 billion dong. The woman said previously, “she did not think of taking insurance policies because she thought she would never need insurance.”

Local newspapers in mid-October reported that a businessman took an insurance policy under which he would get the record compensation sum of 35 billion dong, or nearly two million dollar in case an accident occurs.

AIA Vietnam reported that just within a short time, it continuously issued insurance policies with big values: a 25 billion dong insurance policy was issued in late 2009, a 35 billion dong policy in July 2010, and a 39 billion dong in September.

Though being happy with the prosperity, life insurance companies say they are facing many difficulties, including the high inflation. The rising price increases have worried their clients, which have led to the high percentage of canceled contracts. According to AIA, the percentage of canceled contracts one year after the contracts are signed is 20-30 percent, while the figure is just five percent in neighboring countries.

However, Vietnam is still an attractive market in the eyes of foreign life insurers. Fubon Vietnam just received the operation license in late 2010, and it has announced the plan to start operation in the first quarter of 2011.

29 non-life insurance companies; 12 life insurance companies; 12 insurance brokerage, and one re-insurance corporation are operating on Vietnam’s market. – Vietnamnet

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