The demand for health care and motor insurance has grown in the past few years in Vietnam, notes Willis Towers Watson in its recent "Asia Insurance Market Report 2018".
The global advisory, broking and solutions company says in a segment of the report that focuses on Vietnam that traditionally, motor insurance was mostly bought by corporates looking to insure their company vehicles; however, as people began to purchase more expensive cars, the demand for private motor insurance showed significant growth.
More insurance products have also started entering the Vietnamese market. In the past, a number of products were not sold due to limited market size. However, some lines such as trade credit insurance have started to see demand increase. Vietnamese insurance companies are trying to keep pace with continuous change in the market by offering more sophisticated products, catering to those who want to spend more on better coverage. In addition, regulations have widened the product range. For instance, in March 2017, a circular came into effect, mandating purchase of three types of compulsory insurance in construction: Construction Works Professional Liability, and Workmen Compensation.
The economy is still growing, and the expectation is that certain personal lines will continue to strengthen. Business Interruption insurance is expected to rise in demand as the transport and logistics industries develop – however, this growth is expected in the long term, possibly three years from now, unless there is a change in regulation to bring in more capacity to the market.
There are 18 life and 30 non-life carriers in the market. Due to high capital requirements, entry into the market is restricted to large foreign ventures. A number of regional insurance companies from Korea, Japan and China have started buying shares of Vietnamese insurers. For example, Dongbu has a 37% share of PTI, Sumitomo holds 18% shareholding of Bao Viet Holdings, and Samsung Fire and Marine (SFMI) has a 20% share of PJICO. With the deal, PJICO becomes the fifth non-life insurer in the market, along with Bao Viet, Bao Minh, PVI, and PTI, to enter into strategic partnerships with foreign shareholders.
In May 2017, the MOF issued regulations for the whole insurance industry including insurers, reinsurers, brokers, agents, that cover conditions to meet to apply for a licence to detailed rules governing operations. Cooperation between a licensed broker and overseas brokers has been accepted, provided that the overseas brokers meet the criteria to provide cross-border services into Vietnam, such as the maximum net retention by an insurer per individual risk.
The remaining questions are how the market will grow and how the reinsurance market will develop, and whether this growth will be accessible to foreign brokers, especially in the oil, gas, and infrastructure sectors, says the report.