Despite great potential, the growing competition makes international reinsurers cautious in providing reinsurance capacity in the Vietnamese market. Trinh Anh Tuan, general director of PVI Reinsurance Joint Stock Corporation (PVIRe) said that the differentiation in the treatment of reinsurance companies with insurance companies would be increasingly clear. Insurance companies with a solid business background, strict and consistent exploitation policies will be the priority of reputable reinsurers.
Information from the insurance market shows that reinsurers around the world gradually tighten terms and conditions in the Vietnamese market. The reinsurance market in 2019 was quite difficult when Swiss Re stopped participating in some contracts, reducing the reinsurance participation rate. What is your opinion?
Currently, Swiss Re is still participating in many fixed reinsurance contracts in Vietnam. Swiss Re stopped some contracts, but it is normal when there is a gap between supply and demand.
The reinsurance market tends to be long-term cooperation, but when the buyer (insurance company) finds the right source (from other reinsurers) to suit the needs, the transition is reasonable for all parties.
Besides joining fixed contracts, Swiss Re still participates in many other temporary reinsurance contracts of domestic insurance companies. It can be said that Swiss Re still has quite strong presence in Vietnam market.
Maybe in a few years, they will come back stronger, this is normal and follows the rule of supply and demand of the market.
Swiss Re is one of the largest reinsurance companies in the world. However, the international reinsurance market has many other reputable reinsurers with strong financial and long-term operations. Many large reinsurers had not previously paid attention to the Vietnamese market because at that time the size of the market was small, this was the time when they found it necessary to join the insurance market in Vietnam.
Due to the large loss rate, the reinsurer decided to increase the reinsurance fee and tighten the minimum conditions to control risks. How will this affect the Vietnamese insurance market?
The global reinsurance market has been heavily affected by natural disasters in recent years such as Hurricane Harvey, Irma, and Maria in 2017, super typhoon Michael 2018, Dorian 2019 in the US or disasters in Japan.
The financial situation of the reinsurers is affected, many units restrict or stop the temporary and permanent operation of technique and property.
The general reinsurance market applies an increase in fees for industrial risks from 10 percent to 50%, the market trend shifts from the proportional to non-proportional reinsurance contracts. The reinsurance arrangement capacity has significantly reduced.
In recent years, the Vietnamese insurance market has had two businesses with poor results, namely hull and assets. These are two businesses with continuous big losses, the insurance companies have to pay more compensation than they collect. Therefore, the reinsurance purchase fee of these two operations tends to increase, the extent of increase will vary from different companies.
Other insurance businesses tend to be more stable, but due to the impact of the Covid-19 disease, the financial capacity of international reinsurers is significantly affected.
Many forecasts say that in the near future, the original insurance companies in the world in general and in Vietnam in particular will have to pay more to be reinsured because reinsurance companies tighten their exploitation policies to ensure profit.
How will the exploitation policy of PVIRe in the near future change in the context of strong competition in the domestic reinsurance market?
Since its establishment in 2011, PVIRe has always complied with flexible exploitation policies, ensuring stable financial capacity, and assuring the original insurance companies’ operation when major losses occur.
As a reinsurance company in the country, we understand the risks in Vietnam and the needs of customers.
Therefore, PVIRe always accompanies the insurance companies to jointly offer flexible insurance programmes that meet the needs of the beneficiaries, ensuring the long-term interests of all parties involved.
In the coming time, forecasting that many difficulties will come from the international reinsurance market, PVIRe will continue to review the exploitation policy to provide solutions suitable to the market, join hands with insurance companies building the sustainable development of Vietnam’s insurance market.
