Strategy, solidarity winning combination

Monday, Aug 05, 2013 08:00

Traffic is congested at the Lang Cha Ca intersection in HCM City's Tan Binh District. Some insurance packages have been developed in order to reduce accidents and raise awareness of abiding by traffic laws. — VNA/VNS Photo Hoang Hai

(Biz Hub)—The Post-Telecommunication Joint Stock Insurance Corporation (PTI) achieved an impressive growth rate of 30 per cent last year, three times higher than the average rate for the non-life insurance market. Viet Nam News spoke to Bui Xuan Thu, PTI's deputy general director about the results and its plans.

In the first half of the year, the market saw a declining growth rate. How could the situation be improved?

Bui Xuan Thu.

The sector experienced a lower rate of growth in the first half of this year because of economic difficulties. Statistics from the Ministry of Finance's Insurance Supervisory Authority showed that non-life insurance premiums during this period stood at VND11.88 trillion (US$562 million), up by only 2.2 per cent over the same period last year. This was the lowest growth rate so far. In my opinion, insurance enterprises should make changes in their business strategies instead of pursuing only revenue in the context of an economic slowdown. Businesses should focus on improving operational effectiveness, administration and competitiveness. In addition, we should enhance the quality of service to retain customers. Retaining loyal customers would be an effective solution to stabilise businesses' revenues, as it is difficult to attract new ones.

This year is considered to be a year of economic restructuring. How has the insurance sector implemented restructuring?

The sector's restructuring plan was approved by the Government at the end of last year. Accordingly, insurance businesses are classified into four groups based on their business results. I think it contains sound policies that make business operations more transparent and meeting the development requirements of the economy.

From the end of last year, several major insurance companies have begun to improve management and financial capacity. Our corporation has taken specific actions in reviewing and adjusting management methods to ensure service quality.

Your corporation last year achieved satisfactory results despite the difficulties in the economy. Could you tell in detail how these results were reached and what made you reap such achievements?

Last year we achieved a growth rate of 30 per cent over 2011, accounting for 7 per cent of the insurance market.

There are two main reasons for the achievements. Firstly, we develop a detailed business strategy which is suitable for the business environment, the economy, as well as the specific characteristics of PTI's network. The achievements were the result of our strategy set in 2009. We have made use of our retail advantages through the VNPost network.

Secondly, we built a culture of solidarity and dedication to create unity. This is a special culture and strength at our corporation.

You set the goal of becoming the leading insurance retailer while several insurers have also carried out new strategies for the retail market. Would the target create great pressure for your company?

The retail market has a lot of potential but requires a large investment in terms of the sales network management and management technologies. In addition, the cost of marketing and sales will be higher in order to well operate a large retail network. However, the success in comprehensive co-operation with the Viet Nam Post and Telecommunication Corporation brought about big advantages in comparison with other non-life insurance companies. Our company could sell products through more than 18,000 post-offices nationwide. We can say that our company has been the non-life insurance business with the largest sales system and customer care in Viet Nam thanks to this network. Sales through the VNPost network is expected to grow 30 per cent this year, contributing nearly 30 per cent to the corporation's insurance revenue.

What is your plans for future growth?

In the near future, we shall shift our focus from accelerating growth to reviewing operation and improving service quality to enhance business effectiveness. We shall attach great importance to improving the quality of our customer service, as this would be our competitive advantage in becoming the leading insurance retailer in Viet Nam.

We shall also diversify our retail products for all customers, while maintaining professional growth. The products and distribution channels will be widely expanded with suitable modern and dynamic trends such as bank affiliation, brokerage and online purchasing. We shall concentrate on two retail products - people and vehicle insurance - based on our strong distribution network throughout 63 provinces and cities.

In the next five years we plan to increase our charter capital from VND700 billion ($33.3 million) to VND1 trillion ($47.6 million) with a minimum targeted revenue of VND3 trillion ($142.8 million). We shall continue to maintain our position among the three businesses having the highest P/E ratio in the non-life insurance sector.

The market share of your corporation on vehicle insurance is huge. Given the fact that reducing traffic accidents could lower the cost of insurance payments, what solutions does your corporation have for supporting the country in reducing traffic accidents through insurance packages or activities?

I believe we should join hands with the authorities, businesses and organisations, and especially people on road to reduce traffic accidents. Currently our company, together with other insurance companies, has created a vehicle insurance fund in order to strengthen communication with people and to raise awareness of abiding by traffic laws.

For PTI in particular, we have many activities contributing to reducing the rate of traffic accidents, such as providing clients with quality helmets, driving skills and measures to handle unfortunate incidents.

Currently, several banks have started to develop bancasurrance products. Could you give some details about the model?

Bancassurance is a term for a model and product which is co-operated by banks and insurance companies. The partnership will benefit banks, insurance companies and customers. Insurance companies could diversify distribution channels as well as increase fee revenues. The collaborative model will deliver significant services revenue to banks beyond their core products. The affiliated product is one of the effective financial solutions for customers. This channel promises to bring additional business prospects to insurance companies in the future.

Currently, we have co-operated closely with major banks, including MSB, VPBank, Techcombank and LienVietpostbank to develop the strength of our products, including vehicle and health care insurance. The channel has moved impressively since it was launched in 2011. Our revenue last year saw a 76 per cent increase to VND80 billion ($3.8 million), ranking second on the market.

We are investing in research and development to build our own products in accordance with the characteristics of the distribution channels, and in-line with customer demand. For example, when we realised there was a need to protect valuable assets, such as buildings and property in urban areas, we quickly co-ordinated with Maritime Bank to design home insurance products to meet the new needs of customers. The products are built with many advantages, such as we don't need to assess house prices or assets inside, convenient procedures, and preferential fees.

In particular, customers will also enjoy other additional benefits such as being given support for house rental, architectural design fees and site cleanup costs. The product has attracted more than 1,000 customers after being launched only two months ago. — VNS

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