Vietnam is one of the world’s most dynamic and rapidly expanding insurance markets, providing considerable growth potential for life insurance companies operating in the country. In fact, the Vietnamese life insurance segment is widely considered to be an emerging market with greater potential for further growth than the life insurance markets of other Asian countries, such as China and India. This is the clear message to emerge from a Timetric report called Life Insurance in Vietnam, Key Trends and Opportunities to 2016, which is available at the Insurance Intelligence Center.
The Vietnamese life insurance segment has recorded significant growth since 2000. This growth was supported by the country‘s strong macroeconomic and microeconomic fundamentals, as well as an increase in consumer awareness regarding the benefits of insurance products.
As a result of these factors, the country’s life insurance market registered a strong compound annual growth rate (CAGR) of 14.3% during 2007–2011.
Over the same timeframe, the majority of life insurance policies sold in Vietnam were endowment policies, with such polices accounting for a 70.9% share of the segment‘s total written premiums in 2011.
Vietnam’s life insurance market is expected to continue to expand between 2012 and 2016, driven by the country’s economic growth, increasing annual disposable income levels, and expanding middle-class population.
From a regulatory perspective, the Vietnamese government recently increased the minimum capital requirement for life insurers wishing to operate in the country to VND600bn, a move that is expected to make it more difficult for smaller insurance companies to enter the Vietnamese insurance industry, and is anticipated to have its most notable impact on smaller Asia-Pacific insurers.
Although this new standard will only encourage large multinational foreign companies to enter the country, the number of large life insurance companies operating in Vietnam is not expected to increase significantly from its 2011 total of 14 between 2012 and 2016.
Traditionally, Vietnamese life insurance companies have relied on their large networks of insurance agents in order to distribute insurance products across the country.
However, with the entry of multi-national insurers into the country during 2007-2011, life insurance companies are increasingly recognising bancassurance’s potential to be an important distribution channel and to help increase the penetration of insurance products in the country.
Further development of bancassurance could significantly increase the penetration of life insurance products across Vietnam between 2012 and 2016.