Newcomers eye life insurance market

High economic growth rates, the increasing per capita income, the rapidly developing insurance market, the low number of rivals and sustainable growth for insurance companies – all these factors make Vietnam’s life insurance market more and more attractive to big insurers.

Besides Generali, which obtained its license to set up an office in Vietnam in August 2009, the life insurance market will also welcome newcomers in the form of joint-venture companies. To date, Vietnam has 11 life insurance companies and only one is a joint-venture – Vietcombank-Cardif.

Dau Tu Chung Khoan newspaper quoted sources that revealed foreign and Vietnamese partners are negotiating to form new joint-ventures. Agribank and Sumitomo Life, Vietinbank and European Life; and BIDV and Meiji Yasuda are reportedly in negotiation.

Cooperation between banks and insurance companies has occurred in many countries of the world, bringing high proportions in the total insurance premiums, especially in Thailand, Indonesia and South Korea, Malaysia, Taiwan, Hong Kong and Singapore.

In theory, when insurers work with banks, they can access the wide bank network to sell insurance. Yet cooperation cannot bring high benefits, creating only one percent of total life insurance premiums.

The ineffective outcome has many causes. In many cases, banks have not been ready for cooperation. Some insurance companies do not understand the banking industry culture. In other cases, banks do not want to share information. Some 90 percent of insurance policies have been sold under the mode of savings products, directly competing with bank savings products.

Regarding the domestic insurance market, financial experts say the market has great potential, especially in the eyes of foreign investors. Presently 10 of the 11 life insurance companies are foreign-invested. Prudential, Bao Viet and Manulife, the three biggest insurance companies, now hold 80 percent of the market.

The GDP per capita has been growing steadily, thanks to sustainable economic growth. Insurance companies have been operating well, even within the context of high inflation. Dai-ichi Life Việt Nam, ACE Life, and Korea Life Vietnam have all reported high growth rates for the first quarter of 2010.

Tags: life insurance market, Vietnam insurance, Vietnam insurance market