Vietnam insurance market: Fast growth on a sustainable basis

The business and financial capacity of insurance companies continues to improve in 2017. Photo: S.T.

Total revenue reached more than VND 105 trillion

According to the report by the Department of Insurance Management and Supervision of the Ministry of Finance, the total revenue in the insurance industry in 2017 is estimated at VND 105,611 billion, an increase of 21.2% compared to 2016. In which, non-life insurance was estimated at VND 40,561 billion (increased by 10.61%) while life insurance was VND 65,050 billion (rose by 28.9%). Along with that, the business and financial capacity of insurance enterprises continues to increase, and increasingly contributing to the economy. Specifically, the total assets of insurance companies are estimated at VND 302,935 billion. This figure has increased by 23.44% compared to 2016. Insurance enterprises have invested around VND 247.801 billion to the economy and the total insurance reserves is estimated at VND 190.930 billion. In 2017, insurance companies paid insurance benefits estimated at VND 29,423 billion. This amount increased by 14.92%.

According to Ms Pham Thu Phuong, Deputy Director of the Insurance Management and Supervision Department: “In the context of the economy, it is still facing many difficulties, challenges and economic recovery, but not yet firmly... with the efforts of regulators and insurance companies, the insurance market continued to maintain a steady growth momentum and the policy mechanism was perfected. Insurance basically ensured the financial and effective development”.

In 2017, many legal documents were promulgated. The Ministry of Finance has issued the Circular No. 50/2017/TT-BTC guiding the Decree No. 73/2016/ND-CP detailing the implementation of the Law on Insurance Business. In addition, many legal normative documents are being developed proposing the Government to promulgate decrees on agricultural insurance; the Decree replaces Decree No. 130/2006/ND-CP on compulsory fire and explosion insurance; decree regulating the implementation of microinsurance by socio-political organizations; amending and supplementing a number of articles of Decree No. 98/2012/ND-CP on sanctioning of administrative violations in the field of insurance business and lottery business.

Notably, the representative of Insurance Management and Supervision Department said that the market development, and product development was also promoted. The Ministry of Industry and Trade has cooperated with the Ministry of Finance to approve 22 new products, and revised 13 products. The Insurance Regulatory Authority also urged insurance enterprises to buy long-term government bonds. Accordingly, insurance companies successfully auctioned VND 15,040 billion of 30-year government bonds; VND 4,383 billion of 20-year government bonds, and VND 475.3 billion of 15-year government bonds.

During the past, the Ministry of Finance has stepped up the inspection work. It promptly proposed insurance companies to select a prudent investment, to ensure compliance with the law on investment portfolios and investment ratios, and to review and finalize the process of handling assurance benefits to improve the quality of customer services. “Through the inspection and examination, timely detecting and rectifying insurance enterprises wrong doings, allows for financial proposal solutions. Therefore, strictly handling violations, maintaining discipline, contribute to ensure the healthy, safe and effective market development”, said Ms Pham Thu Phuong.

Diversification of insurance products

In order to ensure that the insurance market continues to grow in 2018 and in the coming years, the representativs of the Insurance Administration and Supervision Department said that, it will focus on implementing some solutions to promote the development of insurance market, in which continue to focus on improving the legal system such as: Submit to the Government to issue a decree on microinsurance by the social and political organizations. At the same time, the Ministry of Finance will review and evaluate the Government's Decree No. 103/2008/ND-CP and the Decree No. 214/2013/ND-CP on the compulsory insurance for civil liability of motor vehicle owners. New policies will encourage and support insurance companies to develop and diversify insurance products, professionalized distribution channels insurance. In addition, the insurance regulators will study and issue guidelines on e-transactions in the insurance sector, creating a legal corridor for insurance enterprises to deploy new distribution channels.

According to Ms. Pham Thu Huong, in 2018, the management will focus on improving the quality of insurance services; reorganization of insurance enterprises; money laundering prevention, etc. The Insurance Administration and Supervision Department will also strengthen supervision and inspection of the insurance market, in which remote monitoring, inspection and on-site inspection will be strengthened by periodically assessing insurance enterprises and promptly detecting violations so as to guide them according to their competence or report them to the Ministry for handling.