In the past year, most insurance companies had focused on changing the quality from product design, technology application development to better customer service value. The target of market share, which, though, had never been officially recognised by insurance companies, was no longer the number one criterion in the business strategy of many insurance companies.
Deceleration of leading businesses
Although there were still insurance companies that kept the growth rate of new 100 percent or even nearly 200 percent in the market, these were insurance companies with small market share.
Enterprises in the top group accounting for more than 60 percent of the market share of the whole block had declined the growth since the end of 2018, typically Dai-ichi Life Insurance Company of Vietnam (Dai-ichi Life Vietnam), or Prudential Life Insurance Vietnam Company Limited (Prudential Insurance).
The cooling down of the growth rate of Dai-ichi Life Vietnam since the end of Q2/2018 had not affected much the growth rate of the whole market in 2018, but it could be seen from the beginning of 2019.
According to preliminary statistics of insurance enterprises, the market’s new insurance premiums for the first nine months of 2019 grew by 17%. In the same period of 2017 and 2018, the growth of mining revenue always reached over 30%.
Newly-growing mining fees had slowed down, but total fee revenue had been growing well because, in the previous years, new insurance premium revenues had risen sharply.
Data from the Insurance Administration and Supervision Department showed that, in the first nine months, the total fee revenue of life insurance businesses was estimated at 74.477 trillion dong, increased by 24.5 percent over the same period in 2018.
That was the fifth consecutive year the life insurance market maintained a growth rate of over 20%.
However, this growth rate was forecast to slow down in the coming years because when the growth rate of new mining revenue continued to decline sharply. The total premium revenue would increase slowly and may decrease drastically because many contracts were coming to expire date.
Of course, along with mandatory deceleration to restructure, the slow growth of new mining fees of the life insurance block also was due to other reasons, such as the change of agent recruitment policy, declining recruitment leading to a decline in new premium revenue, and the growth rate of five percent of the new insurance premiums coming from life insurance market agents only in the first nine months of this year.
New fee collection of the whole block grew at 17%, mainly thanks to the boom of the bancassurance channel, with a growth of about 66%.
Although new insurance premiums from the beginning of the year fell to below 20%, insurers were not too concerned and thought that this was an appropriate growth after a period of fast growth with fee revenue at over 30%. Even some businesses had a dominant market share, pushing the new fee revenue to grow by nearly 60%, which was considered an alarming rate for companies with a large market share.
Quality, no longer “know and say”?
The deceleration was to rethink and adjust policies towards sustainable development after a period of overheating growth. That was a strategy to be practical and essential to be implemented in Vietnam insurance market, yet there had no real insurance enterprises doing this strategy.
Vietnam was still an emerging market of life insurance, so the growth potential was still tremendous. Businesses would seek to re-open the market and exploit the potential of new premium lines. However, of course, most companies would focus more on quality of growth, an insurance company Chief Executive Officer (CEO) said.
In fact, the change in agent recruitment method made the recruitment of new agents difficult, and the number of new agents decreased (six months of recruiting new agents decreased by 17%). Because difficult recruitment exams also forced insurance enterprises to look back on the method of agency training previously which was teaching to pass, but not being a good consultant.
Not to mention, the training after signing agency contracts still continued to be a big challenge.
According to an industry expert, the insurance market wanted to develop sustainable quality, it was necessary to gradually improve the agency level and enhance the ability of direct advice.
Opening a full-time agency recruitment channel was also one of the initial steps and a longer-term view of the insurance industry.
Besides, another noticeable change in the insurance industry over the past time was the application of technology and new development strategies when Fintech and Insurtech startups appeared.
Not only would it be easier to sell insurance products, but it would also take less time to resolve claims for customers.
For example, Manulife Vietnam Insurance Company Limited had launched an electronic compensation process that did not need to provide too much customer data, send an identity card and take photos and transfer insurance money to customers who were currently insured by the company. Insurance via bank was from one to two days, however, Manulife expected to carry out an automatic payment process for customers by 2020.
When the new system was deployed, after making a compensation decision, customers would receive the money within a few minutes.
According to Jetsura Vongvichien, in charge of the Financial Services Division, SAP in Southeast Asia, there were changes in the value chain of the insurance industry.
The new insurance companies having better-operating costs, a better experience for customers would create competitive pressures on traditional insurance companies, Jetsura Vongvichien shared at ‘National Forum on Insurance Vietnam 2019′ just taking place in Hochiminh City.
A study by Prudential Insurance also showed that up to 57 percent of customers would stop buying current company insurance if another company had the same product, but for a better experience; 67 percent of customers were willing to pay more for excellent products and services.
These were decent numbers for insurance businesses to reflect. In the socio-economic development, the right to choose belonged to customers, so investing in services and products to improve customer experience was the most crucial strategy of each insurance company and needed to be implemented drastically.
Sharing the recent visit to Vietnam, Nic Nicandrou, CEO of Prudential Insurance Asia, said that the goal of this insurance company was to provide health care solutions with reasonable prices and easy access to everyone in Asia. In line with current consumer trends, Prudential Insurance would continue to do so through mobile devices and other digital channels.
The key to achieving these goals was mobile technology, the application of technology and the provision of services through apps that were currently spreading throughout Asia, including Vietnam, Nic Nicandrou emphasized.
