Reinsurance market brisk

Reinsurance activities play a very important role in helping insurance firms increase profit. But it could also cause bankruptcy for these enterprises if they do not make right assessment on risks. However, currently, many insurers still remain weak in reinsurance specifications, said Trinh Thanh Hoan, head of Insurance Supervisory Department.

Since removing the regulation on forcing insurers to spend at least 20 percent of contract premium on reinsurance activities via Vietnam National Reinsurance Joint Stock Corp (Vinare), this sector has become more competitive.

Insurers not only carry out reinsurance transactions with domestic partners, some of them carry out reinsurance contracts from foreign market.

Many non-life insurers are rushing to hike chartered capital to expand reinsurance business activities.

Currently, reinsurance activities are mainly in non-life insurance sector with most of domestic firms. According to statistic from finance ministry, in 2009, remained premium of non-life insurance market was 9.366 trillion dong, accounting for 68.5 percent of original insurance premium and increasing 1.5 percent year-on-year. The reinsurance premium in 2009 reached 4.302 trillion dong, of which domestic reinsurance premium via Vinare was 1.937 trillion dong.

In 2009, Vinare’s premium from receiving reinsurance contracts reached over 1.1 trillion dong, a year-on-year rise of 2.41 percent and premium from transferring reinsurance contracts at 776.3 trillion dong, up 0.19 percent year-on-year. Particularly, Vinare earned 362.1 billion dong from transferring reinsurance contracts to domestic partners and 414 billion dong from foreign partners.

Vinare’s remained premium was 338 billion dong, up 7.89 percent y-o-y, reaching a ratio of 30.3 percent.

According to Vinare, brisk reinsurance activities in 2009 were thanks to Vietnam’s economy remained good growth at 5.32 percent despite of the world economic recession. This is the foundation for the strong development of insurance market (non-life insurance grew 21 percent). Additionally, insurers were more flexible in reinsurance activities.

Also according to Vinare, Vietnam’s GDP growth in 2010 expected at 6.5 percent, of which growth of industry and construction at 7 percent, services 7.5 percent, total export turnover at 6 percent and FDI attraction at $22-25 billion would bring high growth of 20 percent for non-life insurance sector.

In 2010, Vinare targets to reach 1.12 trillion dong of premium from receiving reinsurance contracts, 364.2 billion dong of remained premium, and 14.5 billion dong of profit from insurance business and 245 billion dong of pre tax profit.

Dautuchungkhoan

Tags: Vietnam insurance industry, Vietnam insurance sector, Vietnam reinsurance market