Non-life insurers set high growth goals despite economic challenges

Vietnam’s non-life insurance market in 2011 is likely to see competition, because more and more insurance companies are entering the market.

Occupying the market shares by reducing insurance fees, increasing development costs and so quickly expanding the office network has made many local companies have difficulties in human resources and capital. Meanwhile, foreign non-life insurance companies are mainly focusing on the markets of HCM City and Hanoi along with a few nearby localities.

In 2011, Post and Telecommunications Insurance Joint Stock Corp (PTI) set a target to gain 1.320 trillion dong revenue, including insurance revenue of 1.050 trillion dong, after tax profit of 121 billion dong and a dividend payout at 15 percent.

Till 2015, PTI is expected to achieve revenues of at least 3 trillion dong, increase its capital to 750 billion dong – one trillion dong (current chartered capital of 450 billion dong). PTI is urgently preparing for its plan to list 45 million shares on the stock market in Hanoi in early March, 2011. It will continue with the growth strategy based on “3 keys”: insurance, financial investment and real estate investment, which are believed to create a firm basis, ensuring its steady growth in market share and maintaining the business efficiency of PTI.

Meanwhile, along with the plan for listing of its shares on the Hochiminh Stock Exchange, Petrolimex Insurance Joint Stock Company (PJICO) also set a revenue growth target of 18 – 20 percent, profit growth of 18 percent compared to 2010 and to develop its business model as a corporation.

Le Van Thanh, general director of Bao Minh Insurance Corp, in 2011 said that despite many difficulties, with the results achieved in 2010, Bao Minh is confident with the implementation of its business strategy from now to 2015. Firstly, the corporation is determined to complete the plan in 2011 with a targeted turnover of 2.613 billion dong, posting a year-on-year growth of 11 percent, profit of 196 billion dong, growing 16.5 percent compared to 2010.

In 2011, PetroVietnam Insurance Joint Stock Company (PVI) set a turnover target of 5 trillion dong, becoming the sales leader in the market for non-life insurance and at the same time raise its chartered capital from 1.597 trillion dong to 1.8 trillion dong.

Such are goals and ambitions, but the new developments of the financial market recently is a big challenge to companies, including insurers. Senior executives of a non-life insurance company acknowledged, the recent large fluctuations in the economy (exchange rate changes, highly increasing petrol prices, high inflation, and interest rates ruling at high levels) will have a negative impact to enterprises. For example, the increases in the price of cars would affect not only manufacturers, distributors, sale agents, but also to affect both banks and non-life insurance companies.

Facing the disadvantage from the economy, insurance companies are trying to diversify sales channels, to create more favourable conditions for buyers as well as helping insurance sale agents easier access to customers. Not only strengthening the traditional sales model, insurance companies are focusing investment on developing strongly online sales models. In addition, the general agent model is also being stepped up by insurance companies to reduce fixed costs and increase linkages with banks to diversify products.

Liberty Insurance representative said the diversification of products is one of the key strategies of his company in 2011.
Liberty will focus more on the exploitation of health insurance products, travel insurance, personal accident and other products for small and medium enterprises. Liberty takes advantage of competition with its product quality, customer service and technology. – Dau tu chung khoan

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