Flights were canceled, people stayed at home instead of traveling, and import/export activities became stagnant because of the pandemic. As a result, insurers experienced tough days in the first half of the year.
The products sold to businesses such as aviation, tourism and cargo insurance became even more difficult to sell during the pandemic.
Do Truong Minh, CEO of Bao Viet, the biggest Vietnamese insurer, said the performance of the insurance sector depends on the health of other business fields, so the poor performance of insurance companies was anticipated.
Airlines canceled flights, travel firms stopped providing tours, and import/export activities were suspended.
The managers of Pjico, a subsidiary of Petrolimex, the country’s largest petroleum product distributor, also complained that it faced big difficulties. The decrease in demand for petroleum products, lower demand for travel, and the sharp fall of petroleum product prices affected the sale of insurance products.
If the pandemic ends by the second quarter of the year, Pjico’s revenue from cargo insurance in 2020 may be 20 percent lower than initially planned.
|Other wholesale insurance products, including asset, engineering and project insurance, which does not make up a large proportion of total revenue, also saw low growth rates because of the declines in FDI capital and other types of investment.|
Other wholesale insurance products, including asset, engineering and project insurance, which does not make up a large proportion of total revenue, also saw low growth rates because of the declines in FDI capital and other types of investment.
As for aviation insurance, insurers had to reimburse insurance premiums because airplanes were not used during the social distancing period.
Poor business performance not only occurred with wholesale operations, but also with motor vehicle insurance, which brings 40-50 percent of total insurance premiums of many insurance companies.
Since people had financial problems in Covid-19, they cut big expense items, which resulted in the slow sale of vehicle insurance. Pjico estimated that revenue from car insurance would decrease by 8 percent.
A senior executive of Bao Minh Insurance complained that some clients decided to cancel contracts or asked for premium payment extensions because their financial situation became worse.
However, not all non-life insurance products have been affected. Health insurance, which makes up a large proportion of insurance companies’ revenue, has continued to grow.
Analysts said that Decree 100, which sets heavy fines for road and railway transport violations, helped insurers collect more motor vehicle owner civil liability premiums. Some insurers even halved the insurance premiums to attract more clients and expand their market share.
In general, insurance companies are cautious about setting business targets for 2020. Bao Viet Group hopes it can get post-tax profit of VND1.2 trillion this year, or 5 percent lower than the previous year.
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