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Vietnam: Non-life sector sees declining underwriting margins

Source: Asia Insurance Review | Dec 2018

Underwriting margins have been decreasing rapidly in Vietnam’s non-life market, according to a new A.M. Best report.
The Best’s market segment report titled, ‘Vietnam non-life market: A growth story in a challenging operating environment,’ says while growth in this retail-led market has been strong, operating expenses are high and economies of scale have yet to be realised as the market is still in a developing stage. Significant spending on technology, branch networks and competition for distribution channels is still required.
However, growth prospects remain positive given the low penetration rate in Vietnam of 0.8%.
Investors, including those from overseas, have been attracted to Vietnam’s non-life market, which is one of the few markets in Asia without restrictions on foreign ownership. 
Although many companies have made high dividend pay-outs and their premium growths have been high, capital injections have been forthcoming, helping to support risk-adjusted capitalisation. However, without margin improvements, attracting new capital will become increasingly difficult. A 
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