Insurance firms change strategies to gain profits

Many enterprises this year have changed business strategy to gain a profit in insurance field, Dau Tu Chung Khoan newspaper reported.

Avoiding the loss in insurance business is the highest priority of Agricultural Insurance Joint Stock Co (ABIC) in 2010. This is a suitable target for ABIC because the insurer last year only earned over 10 billion dong or 45 percent of 2009 profit plan.

Nguyen Van Minh, chair of ABIC said that its revenue from insurance business in 2009 surpassed the target of 60 billion dong so the company had to deduct over 25.5 billion dong (exceeding the initially estimated money amount) for the risk prevention fund. The working capacity of the insurer remained low as compared with the average band of the market, so it had to spend much on administration cost for expanding operation network. Also, the company had to compensate a large money amount for damages of Storm 9 and 11 last year.

To avoid the potential losses in insurance business in 2010, ABIC will not set the overheated growth target. It will concentrate on reinforcing the operation mechanism and business network, developing manpower to upgrade the quality of insurance products and customer care service.

Notably, Vien Dong Assurance Joint Stock Co (VASS) last year posted the better performance of profitable insurance business against 2008′s loss of 17.6 billion dong. At a recent shareholders meeting, the company confirmed the achievements in coming through consecutive business losses of previous years. In 2009, VASS saved the costs of sales and system management through fixing business costs. Total sales and administration cost of VASS was 105.4 billion dong, down 35.6 percent year-on-year. While its revenue growth reached 17.8 percent, the increase of sales and administration costs was only 3.6 percent, marking the new development period and the company’s big efforts.

This year, the insurer has restructured the efficient and economic business products and save administration cost. Especially, instead of focusing on tradition products, VASS will shift to develop new products such as private house insurance, career responsibility insurance, individual responsibility insurance, leadership responsibility insurance, package ones, finance and health insurance.

In 2010, Petroleum Insurance Joint Stock Co (PJICO) plans to gain 1.814 trillion dong in business revenue, including 1.485 trillion dong of principal insurance premium, up 15 percent against 2009, and 86,.4 billion dong from financial investment operation.

Although accounting for a big ratio in revenue structure, PJICO’s insurance profit was only targeted at six billion dong for 2010 while the profit of financial investment is expected to be 80.34 billion dong.

Similarly, Tran Van Quang, general director of Military Insurance Joint Stock Co spoke at the recent shareholders’ meeting that his firm was determined to say “no” as for highly risky insurance products such as insurance for taxi, long-distance passenger cars, containers. It is the time the company cannot pursue revenue targets while ignoring risks in developing profits.

Now 28 insurers are operational in Vietnam. 2-3 of them may be established in 2010 with over 100 kinds of products. The Vietnam’s non-life insurance market would continue showing strong growth and fierce competition in terms of quality, service and prestige.

Clearly, the insurance companies were aware of negative impacts of the chase follow revenue targets. Especially enterprises refused insurance for highly risky specifications.

Dau tu chung khoan

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