The Vietnamese life insurance segment’s gross written premium is forecast to rise from VND38.3trn (US$1.8bn) in 2015 to VND57.7trn in 2020, at a CAGR of 8.6%, according to Timetric’s Insurance Intelligence Center (IIC).
The Timetric report, Life Insurance in Vietnam, Key Trends and Opportunities to 2020, which is available at the IIC, says the Vietnamese insurance industry was transformed in the late 1990s from a state-owned monopolist sector to an open industry.
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During 2011–2015, international commitments including World Trade Organization (WTO) accession, bilateral trade agreements with the US, the EU, Japan, Australia and South Korea, and multilateral arrangements such as the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) supported the reorganization.
Market liberalisation
The move has liberalised the market and provided foreign insurers with investment opportunities.
The Vietnamese life insurance segment’s gross written premium valued VND38.3 trillion (US$1.8bn) in 2015, after recording a review-period CAGR of 24.4%.
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By GlobalDataStable economic factors, a rise in income levels, pension reforms, the introduction of investment-linked products, digitalization, and the expansion of distribution networks contributed to the growth.
Timetric’s IIC says investment-linked insurance policies became popular during 2011-2015 as they offered higher returns than traditional products. Many Vietnamese consumers will accept additional risk exposure for higher returns.
The number of life insurers increased from 11 in 2009 to 18 in 2015, which indicates the segment’s growth opportunities for foreign and domestic insurers.
Portfolio diversification
Life insurers diversified their portfolios, and provided a number of new products such as education plans, universal and unit-linked life insurance, and voluntary pension products. Insurers are also focusing on developing the bancassurance, e-commerce, and agency distribution channels.
The IIC also notes that Vietnam’s demographic structure, such as a large working-age population (70.2%), high life expectancy (73.2 years), and a median age of 29.6 years, makes the segment favourable for life insurers.
Competitive landscape
Vietnam’s life segment was highly concentrated, with the leading 10 insurers accounting for 97.9% of the segment’s gross written premium in 2015.
The two leading insurers – Prudential and Bao Viet Life – together accounted for 55.8% of the segment’s gross written premium. The number of life insurers operating in Vietnam increased from eight in 2005 to 18 in 2016.
The Vietnamese life segment is dominated by foreign insurers such as Prudential, Manulife, Dai-ichi life, AIA, ACE, Hanwha, Prevoir and Generali.
As of 2015, eight foreign life insurers had representative offices in Vietnam. More foreign insurers are expected to enter the industry, between 2015 and 2020 due to the country’s strong economic growth, rising population, and middle-class population growth.
