Health and vehicles to be main growth drivers for non-life insurers in 2023

Friday, Mar 24, 2023 09:06

A customer examining a vehicle insurance product at Bao Viet Insurance Group’s office. The potential growth of vehicle insurance is high car travel increase. — VNA/VNS Photo

Experts have predicted that the health and vehicle insurance sectors will continue to serve as the primary growth drivers for non-life insurance in Viet Nam this year.

Data from the Vietnam Insurance Association reveals that non-life insurance and health insurance comprised the largest proportion of the insurance industry's premium revenue last year, accounting for approximately 33.2 per cent, with revenue of VND22.41 trillion.

This represented a 24.3 per cent increase from the same period in 2021.

In the meantime, vehicle insurance generated a revenue of VND18.1 trillion, comprising 26.8 per cent of the overall market revenue and witnessing an 11.9 per cent growth rate over the same period in 2021.

Health and vehicle insurance products are expected to continue to increase this year, especially when the awareness of people and economic organisations about the role of insurance continues to be improved.

Regarding health insurance, the country’s ageing population structure and rising middle class are driving the non-life insurance market to develop.

According to analysts of the DSC Securities Company, despite high inflation, rising prices of goods and medical expenses, and increasing costs due to the pandemic’s consequences on people’s health, the compensation rate is forecast to keep stable under competitive pressure, thereby attracting people to participate.

For vehicle insurance, the potential growth is high as the trend of travelling by car is increasing thanks to the rising demand from the middle class and the Ministry of Transport’s direction to limit motorbikes.

According to experts, though the health and vehicle segments' profit margin is quite low at 60 per cent and 62 per cent on average, respectively, most non-life insurers still focus on promoting the segments, which is reflected in the high retention rate, averaging over 80 per cent due to the potential for exploitation.

Viet Nam’s insurance industry is expected to keep growing this year, buoyed by the country’s 6.5 per cent GDP growth forecast.

Under Viet Nam’s insurance market development strategy for 2030, the average revenue growth rate of the insurance industry in the 2021-25 period is 15 per cent per year and will reach 3-3.3 per cent of GDP in 2025.

The growth rate will be 10 per cent per year in 2026-30 and will reach 3.3-3.5 per cent of GDP in 2030.

In 2023, the Ministry of Finance expects the average growth rate of total assets, total investment, and total revenue of insurance firms to increase by about 15 per cent compared to 2022.

With the Government’s development orientations and the new Law on Insurance Business in force from January 1 this year, the growth of most insurance segments is expected to continually depend more on the number of new policies of insurance companies.

The new Law on Insurance Business includes many notable changes, such as insurers being allowed to design and deploy insurance products independently without the Ministry of Finance’s approval and removing the ceiling with microinsurance to ensure a balance between premiums and risks.

The new law does not allow insurers to invest in real estate unless they set up other firms, which is expected to support the development of a transparent and efficient insurance market.

However, DSC noted though the new law will have a positive impact, it will not be clear in 2023.

Meanwhile, analysts of SSI Securities Company believe under the new law, insurance companies will further promote microinsurance products.

Bao Viet Insurance Corporation, Military Insurance Corporation, and Post and Telecommunication Insurance Corporation have so far promoted implementing micro-insurance products related to illness, cancer and accident risks, and educational supports, with low costs. — VNS

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