The insurance market has maintained a high growth rate of 21.2 per cent in 2017, gaining revenue of VND105.61 trillion (US$ 4.65 billion), a senior finance ministry official has said.

Customer service are at new office of Generali Viet Nam in Ha Noi. — Photo Generali Viet Nam

Of this total, the revenue from non-life insurance premiums was VND40.56 trillion, up 10.61 per cent, and life insurance premiums was VND65.05 trillion, rising 28.9 per cent, said Pham Thu Phuong, deputy director of the Ministry of Finance’s Insurance Supervisory Authority (ISA).

Besides maintaining a high growth rate, the financial status of insurance firms has also improved in 2017, Phuong said. Their total assets are estimated to rise 23.44 per cent to VND302.94 trillion.

This year, insurance companies re-invested VND247.8 trillion into the economy, which is a rise of 26.74 per cent from last year. They also purchased Government bonds worth VND20.86 trillion in 2017.

The insurers also paid VND29.42 trillion for customers, up 14.92 per cent compared with last year.

Next year, the target of the insurance sector is to gain total revenue of VND129.24 trillion, up 22.38 per cent from 2017. The sector also plans to re-invest VND305.49 trillion into the economy.

Insurance firms are targeting an increase in their total assets to VND370.81 trillion next year.

With the aim of meeting the targets, the insurance industry will focus on building and streamlining legal policies, restructuring insurance firms, besides developing new products and improving the quality of services.

The domestic fast-growing insurance market, poised to thrive thanks to rising living standards, has prompted a number of foreign companies, including the UK’s Aviva Plc and Canada’s Sun Life Financial Inc, to step up their presence in Viet Nam through mergers and acquisition or joint ventures in 2017.

The insurance industry is also expected to benefit from the country’s projected gross domestic product (GDP) growth of more than 6 per cent annually over the next three years.

It also has great potential as the country has one of the world’s lowest life insurance penetration levels, at less than 1 per cent of the GDP. The average insurance premiums in Viet Nam stand at $30, much lower than the global average of $595 and Southeast Asia’s $74.

However, there remain many challenges in the way of further growth of this sector.

Director of ISA, Phung Ngoc Khanh, said that awareness among Vietnamese people about life insurance may have increased, but most still do not believe that it is worth the expense. In fact, almost all Vietnamese people are wary of it and think it unnecessary to buy insurance because they do not have a thorough understanding of its importance, he explained.

Life insurance products usually involve a long-term contract, so many customers are also concerned about their financial capacity to fulfil it in the future, Khanh said. Doubts about the commitment of foreign life insurers to permanently operate in Viet Nam also contribute to its low-penetration rate.

Life insurers have also started partnering with commercial banks to increase sales and promote products, besides traditional sales methods. Though the bancassurance market in Viet Nam has remained sluggish, contributing only 2 per cent to the total turnover of the insurance market, analysts believe that this channel holds great potential, and now some 35 commercial banks and financial institutions are collaborating with insurers. — VNS