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Increased participation of foreign investors will benefit Vietnam’s insurance sector by enriching domestic insurers with experience and governance, according to a report.
An industry report by Bao Viet Securities Company (BVSC) said that the number of life insurance products in Vietnam rose from 100 in 2009 to 350 by the end of 2016. Meanwhile, the number of general insurance products has increased from 200 in 1999 to over 1,000 today.
BVSC also expects the number of new products to grow further this year.
It is believed that foreign investors can benefit the Vietnamese insurance industry by enabling the adoption and development of modern insurance distribution models.
Swiss Re data shows that Vietnam’s general insurance market is working to grow its direct distribution channels, such as online or telesales, while the local life insurance sector’s distribution is still focused on intermediaries, such as agents.
Vietnam has among the lowest insurance penetration rates in the world, at less than 1% of GDP. The average insurance premium in Vietnam is around US$30, which is much lower than the global average of US$595 and Southeast Asia’s US$74.
This means that the Vietnamese market has a lot of room for growth, prompting many foreign insurers to invest in the country. British insurer Aviva and Canadian insurer Sun Life have increased their presence in Vietnam through mergers, acquisitions, and joint ventures in 2017. The insurance sector grew at a high rate of 21.2%, with total premium revenue of VND105.61 trillion (US$4.66 billion). Insurer’s total assets grew by 23.44% to VND302.94 trillion (US$13.34 billion).
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