With the growth rate of more than 30 percent/annum, Vietnam life insurance market still provides the basis for large insurance companies to “bet on”.
Currently, the difficulties that most life insurers in Vietnam are facing include the dramatic fall in government bond yields, leading to the sharp drop of discount rate applied to calculate and significantly raise technical provision. That is not to mention the complex development of personnel/insurance agent and low awareness of the people in insurance.
However, “that is just immediate difficulties, I still see many development opportunities in this market”, said the CEO of the aforementioned insurer.
Representatives of many insurers also showed their confidence in the market development, showing in business expansion plans. Discussing with the local Newswire Dau Tu Chung Khoan about Hanwha Life’s strategy in 2018 as well as in the near future, Back Jong Kook, CEO of Hanwha Life Vietnam said “Hanwha Life Vietnam still keeps the target of becoming one among five leading insurers in Vietnam market in 2025″.
If the situation is favourable, we may further enhance this target by striving to be one among three leading insurers in the market by 2025. In 2018 alone, we are carrying out many strategic products to bring more good insurance products and services to Vietnamese people”.
In its business and development plan in Vietnam market, generali is also rapidly expanding its operations to boost growth scale in the next several years. The target of generali is to become one of the leading insurance brands in Vietnam.
This insurer has been speeding up differentiated customer-oriented business strategy by investing in improving customer experience based on modern technology platform. To serve the expansion of operations, generali has just raised the chartered capital to more than four trillion dong, an increase of seven times from the prescribed amount.
At the beginning of June 2018, Prudential is also approved by the Ministry of Finance to raise the chartered capital to 4.128 trillion dong, continuing to affirm long-term and sustainable commitment of the group in Vietnam market. Other insurers such as Dai-ichi Life Vietnam, Manulife or Sunlife Vietnam have completed the plan to raise chartered capital in order to focus on investing and enhancing quality service with the purpose of bringing about many more new utilities and more convenience in transactions.
According to the source of DTCK, it is expected that in June 2018, the market will have another insurer to raise the chartered capital to nearly five trillion dong to continue the market expansion and investment plan in 2018 and the following years.
“With this capital increase, we are going to become one among three life insurers with the largest chartered capital in Vietnam market”, said the representative of this insurer.
*Increasingly diversified products and distribution network
In terms of distribution channel development strategy, according to insurers, new insurance sale models such as through tivi home shopping or telesales will be expanded in the near future. However, at present and in the near future, new premium revenues still come from the two major channels i.e. agent/consultant and bancassurance.
The year 2016-2017 was a “hot” period in the bancassurance development strategy when some insurers have consecutively signed exclusive cooperation contract with banks in the long time. Most of these exclusive bank-insurance contracts have huge value.
That is the reason why there have had concerns about the fact that bancassurance is difficult to develop for a long term, when value of each deal is pushed higher and higher, which means that costs for bancassurance are increasingly high, equal to the development of agents/consultants.
Besides, a greater concern is that with the exclusive contract signing, customers will not be able to choose the best insurance products or services.
“If a bank sells many insurance products of insurers at the same time, it will create opportunities for customers to choose. Thereby, insurers have to design products as well as provide the best services to compete”, said an industry expert.
Back to the story about bancassurance development in 2018, some people said there will have many cooperation deals to be signed. Instead, this will be the time when insurers that hold in their hands this distribution channel start accelerating revenue plan.
Currently, the contribution of premium revenues from bancassurance at some insurers is about 20 percent/total new premium revenue. These businesses expect that new premiums from bancassurance will increase to about 30 percent of the total new premiums in just 1-2 coming years.
For the product development, as reported by the Insurance Supervision and Management Department, mixed insurance and universal insurance still accounted for large proportion out of the total newly exploited revenue. In the first two months of 2018, investment-linked insurance reckoned for 48.47 percent; mixed insurance made up 28.05 percent; death insurance presented 3.4 percent; pension insurance occupied 1.26 percent and the remaining professions (life-long insurance, periodically-paid insurance, and health insurance-major product) held 6.99 percent. Support premium revenue accounted for 11.5 percent.
Compared to the same period of 2017, newly exploited revenue of investment-linked insurance increased 45 percent; mixed insurance rose 8.45 percent and death insurance soared 152.3 percent. Investment-linked insurance is still considered as the market trend in the near future. However, many signals show that death insurance will return with the new version which is more interesting.
Accordingly, since the beginning of 2018, some insurers such as MB Ageas, AIA Vietnam have brought to the market this product for each type of customer.
“The major purpose of insurance is to protect. This is the reason why we have decided to bring back to the market a new version of death insurance product line with high insurance, low premium and other associated entitlements to increase the attractiveness of products”, said representative of an insurer.
