Insurance firm finds potential in old cars

Monday, Aug 12, 2013 08:00

The owners of old cars often have lower demands for insurance because they are no longer too bothered by minor scratches on the car, and only need financial assistance when dealing with heavy losses. — VNS Photo

With the number of cars four years and older increasing rap-idly, Liberty Insurance Viet Nam has been inspired to embark on a "more challenging business plan", says Do Quang Thuan, the company's first Vietnamese general director.

It is said that there are many difficulties in attracting more customers in Viet Nam, given the current economic situation. What is your strategy to cope with this?

Do Quang Thuan, the first Vietnamese general director of Liberty Insurance Viet Nam.

It is true that the insurance market is facing tough times, but we have decided to focus more on improving business performance alongside efforts to maintain growth above the market average. At present, we are still investing strongly in enhancing our customer service, diversifying our product offerings and deepening our distribution capacity.

In particular, we continue to invest in our employees because they are our most valuable assets. We believe that such investments will help us grow quickly when the market recovers in the future.

As a foreign company operating in Viet Nam, what are the advantages and disadvantages you face?

Viet Nam is an emerging market where the number of middle-class people is growing quickly and the market penetration is still quite low as compared with that in Thailand, China and Malaysia. This means there is a strong growth potential for foreign insurers that focus on personal lines. On the other hand, it is challenging for us to cope with various forms of unfair competition like excessive commission payments, as also make viable business decisions based on insufficient market data.

Automobile insurance is one of the few segments to do well since the number of private cars continues to increase. Since this is your company's specialty, what is your assessment of the automobile insurance market?

Recently, there have been plenty of positive signs in the automobile market, indicating that purchasing power has started to recover.

In particular, the market for old cars has been bustling thanks to the reduction of registration tax from 15 per cent to 2 per cent. So, I think we can be optimistic about the growth of the automobile insurance segment in the coming time. However, it is important to note that car owners have different insurance needs.

In June, your company introduced a new product for old cars. Why did you decide to launch this product at this time?

Liberty MyCar was really inspired by collision insurance offered in developed countries. At the same time, it's based on the statistics of our claims payment in Viet Nam in recent years. This is a super-save product that covers 95 per cent of insurance risks related to physical damage for an average premium of VND6.5 million (US$310) per year, 25-60 per cent lower than our full-coverage car insurance product.

In addition, for VND4 million ($190) per year, car owners are also entitled to 24/7 towing services in case of breakdowns, flat tires, empty gas tanks and accidents. They'll be fully paid for labor costs and get compensated quickly with simple procedures.

Viet Nam's automobile market has grown strongly from 2007 to present with the consumption of 100,000 -120,000 units per year. The total number of cars in the market today is 1.5-1.8 million, of which three-year old vehicles account for about one-third, and I foresee that within two or three years the used-car rate could rise to 50 per cent.

In every market, the demands for insurance for cars which are older than three years are completely different. The owners of old cars often have lower demands for insurance because they are no longer too bothered by minor scratches on the car, and only need financial assistance when dealing with heavy losses. They also don't want to spend much money on insurance, but still want to be compensated quickly, simply and transparently when losses occur.

At the same time, they want to be served by a well-known brand. In Viet Nam, there has been no insurance service exclusively catering to this client segment. Therefore, we believe that our new product will be well received by many customers.

What are its advantages compared to existing car insurance products?

Insurance customers care most about claims service. We have shown that our service is second to none since we began operating in 2007.

Regardless of its low price, Liberty MyCar also provides service at qualified repair garages that meet our high standards, and the car owners will also get a six-month warranty on the repairs done.

As the first Vietnamese General Director of Liberty Insurance, have you faced any difficulties your predecessors may not have? How do you plan to win in a market that has more than 20 others offering auto insurance products?

Our competition is not doing very well on the profit front. The shares of most insurance companies have gone down to below their book value. I think that all insurance companies need to raise their discipline level, clearly define their risk appetite, and be more sensible about expanding insurance coverage.

In any industry, compliance is the fundamental guarantee for sustainable development, and we strongly believe in this principle. — VNS

Comments (0)