Viet Nam’s insurance industry achieved high year-on-year growth of 24.35 per cent in the first half of 2018, helping total revenue to reach more than VND58.65 trillion (US$2.55 billion).

Deputy general director of the Ministry of Finance’s Insurance Supervisory Authority (ISA), Doan Thanh Tuan, said besides maintaining a high growth rate, the financial status of insurance firms also improved in the first six months. Their total assets rose an estimated 27.33 per cent on-year to VND336.997 trillion.

During the period, insurance companies re-invested VND277.38 trillion into the economy, marking an on-year rise of 27.47 per cent, Tuan said, adding that insurers also paid out VND16.32 trillion to customers, up 22.43 per cent compared with the same period last year.

He said that ISA would step up its efforts to restructure the insurance market in the remaining months of the year, aiming at transparency, safety and efficiency.

This year, the insurance sector has targeted revenue of VND129.24 trillion, up 22.38 per cent against last year. If it hits the target, it would be the fifth consecutive year the insurance industry has posted annual growth of more than 20 per cent. The industry’s total revenue surged by 21.2 per cent to VND105.61 trillion in 2017.

Phung Ngoc Khanh, the ISA’s general director, said that Viet Nam’s insurance market had high potential as the number of customers remained low while incomes and awareness were rising.

The insurance industry is also expected to benefit from the country’s projected GDP growth of more than 6 per cent annually over the next three years.

It also has great potential as the country has one of the world’s lowest life insurance penetration levels at less than 1 per cent of the GDP. The average insurance premiums in Viet Nam stand at $30, much lower than the global average of $595 and Southeast Asia’s $74.

Many insurers, such as Generali and Prudential, have recently decided to increase their charter capital and expand their business operations as they forecast the market will grow.

The Viet Nam Insurance Association reported there were 18 life and 30 non-life insurers in the Vietnamese market. Among the 18 life insurers, only Bao Viet Life Insurance is Vietnamese owned, while the remainder were joint ventures or wholly foreign-owned companies.

According to experts, the participation of foreign investors in Viet Nam’s insurance market would develop the market while enriching domestic insurers with experience and governance.

In addition, modern distribution models in the local insurance industry had been gradually developing thanks to the participation of foreign investors.

“The participation of foreign investors has helped domestic insurers increase their competitive edge through the enhancement of training and diversification of products,” Bao Viet Securities Company noted in a report. — VNS