Vietnam’s insurance industry maintained positive growth in the first half of this year, with total revenue surging by 24.35 per cent year-on-year to nearly VND71.15 trillion (US$3 billion), the Ministry of Finance’s Insurance Supervisory Authority (ISA) reported on Thursday.
During a conference to review the industry’s performance in the first six months of 2019 and carry out tasks for the second half of 2019 held in Hanoi, Pham Thu Phuong, ISA’s deputy director, said besides maintaining a high growth rate, the financial status of insurance firms also improved in the period with total assets rising by 19.01 per cent to VND423.42 trillion.
“During the period, insurance companies re-invested nearly VND342.87 trillion into the economy, marking a rise of 26.17 per cent year-on-year. They also paid out VND18.65 trillion to customers, surging 19.61 per cent compared with the same period last year,” Phuong said.
According to the ISA, the insurance industry is targeting a growth rate of 20 per cent this year.
To meet the target, in the remaining months of the year, ISA’s general director Phung Ngoc Khanh said the ISA would continue to improve mechanisms and policies towards focusing on restructuring to make the insurance market develop transparently, safely and efficiently as well as in line with international standards.
“In particular, the ISA will focus all resources to complete the revised Law on Insurance Business as well as regulations to guide the implementation of the law according to Vietnam’s commitments in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as well as other free trade agreements that the country signed,” Khanh said.
The ISA will also draft policies on micro insurance, compulsory insurance for civil liability of motor vehicle owners, disaster risk insurance and public property insurance to submit them to the government for approval.
In addition, the ISA will study to issue policies with the aim of encouraging the development of new products, especially those in accordance with Industry 4.0, as well as social welfare products.
Experts have so far remained upbeat about the insurance industry’s health in the coming years, forecasting that it would maintain an annual growth rate of 10-20 per cent. Many banks that cooperate with insurers to provide bancassurance products even expect an annual growth rate of up to 30-40 per cent.
The fast-growing domestic insurance market should thrive thanks to rising living standards and a high gross domestic product (GDP) growth of more than 6 per cent annually over the next three years, experts said.
The growth potential is great as the country has one of the world’s lowest life insurance penetration levels at less than 1 per cent of GDP. The average insurance premium in Vietnam stands at $30, much lower than the global average of $595 and Southeast Asia’s average of $74.
The ISA reported that the country has 64 insurance companies, including 30 non-life insurers, 18 life insurers, two reinsurance companies and 14 insurance brokerage companies.
There are up to 850 non-life insurance products and 450 life insurance products sold on the Vietnamese market.
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