In 2018, many non-life insurance companies set cautious business targets, especially those having large market share.
According to business plans, insurer with large market share such as Bao Minh, PTI, and PJICO aims to achieve revenue growth of about 5-10 percent, in which 10 percent is the highest rate if the market sees more positive factors than forecasts. Some other companies set very low growth and even did not aim at positive growth this year.
In 2018, Bao Minh targets to reach total revenue of 4.318 trillion dong, up by 5.6 percent. The company generated 4.089 trillion dong revenue, 4.36 percent exceeding plan. In particular, original premium revenue reached 3.411 trillion dong, 2.68 percent exceeding plan and up by 9.96 percent compared to 2016. According to Bui Xuan Thu, general director of PTI, the insurance market is likely to continue experiencing fierce competition and the natural disasters are unpredictable. “With the aim of controlling the compensation rate and maintaining business and production efficiency, we expect to grow the 2018 revenue at the overall rate of the market of 8 percent”, said Thu. In 2017, PTI recorded 3.331 trillion dong in revenue, up by 3.2 percent compared to 2016. For PJICO, the company aims at 8-10 percent revenue growth this year, with the expectation to develop the group of foreign-invested clients and promote trendy sales channels such as bancassurance and online channel, etc.
For insurers with smaller market share, the growth targets in 2018 are set higher than the common target of 8-12 percent of the market. For example, BIC strives to achieve premium revenue of 2.1 trillion dong, up by 16 percent compared to 2017, and aims to record profit from insurance business. The total premium revenue of BIC in 2017 was 1.810 trillion dong, up by 6 percent compared to the previous year. Its original compensation rate was 41.6 percent in 2017, lower than the 40.3 percent recorded in 2016, being the lowest rate in the past three years.
Meanwhile, MIC sets revenue target at 2.5 trillion dong, up by 20 percent, and compensation rate at below 32 percent. Last year was a fairly successful year for MIC as it for the first time attained revenue of 2.123 trillion dong, up by 11 percent, raising the market share from 4.5 percent to 5 percent.
According to some experts in the industry, the non-life insurance market in 2018 is forecasted to see major changes which mainly come from the cost management activities under the pressure of shareholders.
Domestic companies have set lower growth targets, partly to cope with the possibility that car prices will fall sharply due to the impact of import tax exemption, and also the negative consequences when having to increase fees to cut losses. Since motor vehicle insurance premiums account for up to 40 percent of the total premiums of the market, it is normal when the changes in policies and purchasing powers of the auto market have strong impact on the insurance market.
For foreign non-life insurance companies, the year 2018 is still forecasted to be difficult. Due to the disadvantages in relations and in the race to reduce premiums, dozens of foreign insurance companies together have never surpassed the 10 percent market share.
In the recent time, insurers such as AIG, AAA and Liberty have been continuously restructuring, cutting staff and changing strategies in order to reduce fixed costs. Marketing and branding activities have almost been abandoned, causing these firms to not only fail to keep up with the growth of domestic insurers but also record revenue decline.
“Since the retail insurance product market in Vietnam has a lot of potential but competition is fierce, for foreign insurers, it is still an uneasy playground”, said an expert in the industry.
