Vietnam’s nonlife insurance market gathers steam

The Japanese economic daily, Nikkei on August 11 carried an analysis saying that Vietnam’s nonlife insurance market is attracting more and more corporate and individual customers, and the intensifying competition may spur a realignment among insurers.

It quoted the Vietnamese Ministry of Finance’s statistics that nonlife insurance premium revenue in the country is projected to increase by 15 percent to 15.7 trillion VND (70 billion JPY) in 2010.

Sales of insurance policies for corporate customers — the core segment of the market — are being driven by construction, fire and cargo insurance. The number of construction projects is surging in the Southeast Asian country, as the government is promoting the construction of infrastructure. Sales of fire insurance policies are rising along with the increase in foreign direct investment.

Also expanding is the retail nonlife insurance market, where many of the products are for auto insurance, including that for motorbikes, and medical coverage.

The growth is being driven by rising sales of cars and the increasing number of wealthy and middle-class people who want more extensive coverage than just public health insurance. Strong growth in the housing market is also fueling sales of insurance to individuals.

Bao Viet Insurance Corp. and BIDV Insurance Co. (BIC) started selling fire insurance policies for condominiums this spring. The policies are offered along with mortgage loans by the London-based HSBC Group and the Bank for Investment and Development of Viet Nam (BIDV), with the former partnering with Bao Viet and the latter with BIC.

Vietnam International Assurance Co. (VIA), which is partly owned by Japan’s Tokyo Marine & Nichido Fire Insurance Co., is the largest foreign player in Vietnam. It plans to start offering fire insurance for condominiums this month and is considering partnering with a major local bank.

Nikkei noted that the country’s nonlife insurance market has been growing at a robust pace, but the competition is getting heavy, making it difficult to generate profits. It is estimated that in 2009, only about 30 percent of all nonlife insurers in the country profited from underwriting insurance policies.

An official at a foreign insurer was quoted by Nikkei as saying that given the size of the market, some firms may go through a realignment, reducing the total number to about 15 in five to 10 years.

There are currently 29 domestic and foreign nonlife insurance companies in Vietnam.

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