Minors beat giants in insurance competition

That professional insurers have increasingly lost market share to newcomers in terms of non-life insurance is an undeniable fact in the recent past.

2009 is an unforgettably sad year for the Bao Minh Insurance Company (BMI), which lost the aviation and coal and mineral markets to the Vietnam Non-life Insurance Aviation Company (VNI) and the SHB-Vinacomin non-life Insurance Company (SVIC).

VNI has just been established by the Vietnam Airlines and four other share holders while SVIC was founded by the Saigon-Hanoi Bank and the Vietnam Coal and Mineral Group.

The Military Non-Life Insurance Company (MIC) run by the Military Bank and several other military enterprises have sold non-life insurance to major projects worth thousands of billions of VND each such as the Eastern Truong Son Highway, border patrol roads, hydro-power plants and traffic projects. The MIC has also won contracts to provide accident insurance for servicemen.

These fledgling insurers have managed to cash in on their industrial strengths, putting pressure on the giants.

The PetroVietnam Insurance Company (PVI), for example, has recorded a leading growth rate of 35 percent in premium revenues in the first half of 2009 among the top five non-life insurers. It has now overtaken Bao Minh’s to become second-largest in the non-life insurance market and considerably narrowed its gap with national leader, the Bao Viet Insurance Company.

Statistics released by the Vietnam Insurance Association showed that the PVI has increased its market share to 23.6 percent in the first half of this year while Bao Viet’s market share decreased by 4.5 percent to 26 percent and that of Bao Minh dropped to 14.1 percent from 17.3 percent in 2008.

Newcomers SVIC and VNI have managed to garner 1.0 percent and 1.99 percent of the market, an achievement that would take many other insurers a number of years.

The non-life insurance market in Vietnam is operated by 27 enterprises which sell over 100 products, promising unprecedented growth in the years to come.

Liberty Insurance Company CEO Carlos Vanegas predicted an annual growth rate of 25 percent for the Vietnam non-life insurance market in the 2009-13 period. He added that automobile, heath and property insurance will take the lead in this period.

The Vietnam Insurance Association said non-life insurance premium revenues surged by 15 percent in the first ten months of the year despite the economic downturn.

Tags: Vietnam business news, Vietnam insurance market