Vietnam insurance market sees turnaround

The Vietnamese life insurance industry is showing signs of a recovery after three lean years, with a sharp rise in premiums collected.

The Annual Premium Equivalent (APE) which measures new business in a year soared by 28 percent in the first quarter, the Vietnam Insurance Association said.

The local Bao Viet Life Insurance Company was the top performer with its APE skyrocketing 47 percent, following by Canadian insurer Manulife with 37 percent.

American insurer recorded a 29 percent rise after suffering a drop of 32 percent last year.
Total premiums collected increased by 5 percent this year, it added.

Japan’s Dai-ichi Life Insurance Group too was in positive territory, growing at 28 percent.

UK insurer Prudential Vietnam recently declared a special bonus of VND521 billion for policies bought by 2003 and remaining in force now.

Lapsed policies too qualify for the special bonus if they are reinstated by July 31.

The insiders also predicted the insurance market to boom following the country’s WTO commitments to open up the sector.

From January 1, 2008, foreign insurance companies will be allowed to sell compulsory insurance policies like vehicle insurance and insurance for oil and gas assets.

Earlier this year Japan’s Dai-ichi Life bought out the stakes owned by the US’s New York Life and Australia’s Colonial Mutual Life Assurance Society Ltd CMG in a 50:50 joint venture with the local Bao Minh Insurance Corporation.

Shigeo Tsuyuki, Dai-ichi Life’s deputy managing director, said the company saw major opportunity in Vietnam despite the recent sluggishness.

The life insurance industry depended much on the country’s economic growth rate, he added.

The Vietnamese market is growing at 29 percent a year with premiums topping 2 percent of GDP last year.

HSBC Life International Ltd., HSBC’s life insurance arm, entered the Vietnam market earlier this year, opening a representative office in Hanoi.

The office will research the market, survey customers’ needs, and draw up strategies for a full-fledged entry into the insurance market.

David Fried, director of HSBC Insurance Asia-Pacific said Vietnam’s fast-growing economy, low insurance penetration, and sound legal framework were factors for the insurance business.
Vietnam had 16 non-life insurers, eight life insurers and seven insurance brokers, both foreign and domestic, VIA said.

It added that only Bao Viet could compete with the large foreign players.

Source: Thanh Nien