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, increasing by 24.5 percent over the same period in 2018. That was the 5th consecutive year the life insurance market maintained a growth rate of over 20 percent. However, this growth rate was forecast to slow down in the coming years.
Based on that forecast, new insurance premium revenue this year showed signs of deceleration. According to preliminary statistics of insurance enterprises, the market’s new insurance premiums for the first nine months of 2019 grew by 17 percent. In the same period of 2017 and 2018, the growth of mining revenue always reached over 30 percent.
The decline in the growth of new insurance premiums from the beginning of the year until then had not affected much the growth rate of the total premium revenue of the whole block because a few years ago, new insurance premium revenues increased very high.
The growth rate of exploiting insurance premiums was still in line with the market, an insurance company representative acknowledged.
However, according to this position, if the growth rate of new mining revenue still plummeted in the near future, the total premium revenue would increase slowly and might decline sharply because of more contracts coming to the expire date.
As informed, due to objective factors regarding changes in agent recruitment policy, reduced recruitment leading to a decrease in new fee revenue and subjective regarding new fee revenue of some enterprises with a significant market share, in the first nine months of this year, new insurance premiums coming from agents of life insurance market grew by only five percent.
The new fee collection of the whole block grew at 17 percent, mainly thanks to the boom of bancassurance channel, with a growth of about 66 percent.
The life insurance market was seen to be adjusted, especially in the agency channel, after a period of ‘hot’ growth with a new premium revenue of over 30 percent. Some businesses even had a dominant market share pushing new premium revenue growth by nearly 60 percent which was an increase considered as dangerous for businesses with a large market share.
Therefore, although the new insurance premium from the beginning of the year fell to below 20 percent, insurance enterprises were not too concerned and thought that this was an appropriate growth.
Vietnam was still an emerging market of life insurance, so the growth potential was still enormous. Businesses would seek to re-open the market and exploit the potential of new premium lines. However, most companies would focus more on quality of growth, according to an insurance company Chief Executive Officer (CEO).
For life insurers, the renewal fee was the source of life at present, the new mining fee would be the source of the future (because new mining was required to renew).
But the ‘hot’ growth of new insurance premiums easily led to the consequence that the premium quality was not high. There was a risk that the contract would be canceled after the first big year. The life insurance market had gone through a period of overwhelming growth. Therefore, business leaders must dare to look at the truth to accept one to two years of ‘grief” making corrections for long-term development goals.
In fact, the change of 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 percent), because difficult recruitment exams also forced insurance enterprises to rethink the previous agency training method, which was teaching to pass, but not really paying attention to being a good consultant. Regardlessly, the training after signing agency contracts continued to be a big challenge.
According to an 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 ability.
However, to achieve that, businesses had to accept the slowdown, not able to continuously push fee revenue to 30 percent to 50 percent, especially for companies with large market share.
