Vietnamese non-life insurance sector is virtually in a transition. Pre-pandemic, it was growing at double digits annually but it stalled during COVID-19. It is once again picking up pace and in 2025 registered a growth of 10.6%. Insurance-in-Asia’s Mr Pascal Ho Ba Dam explains what holds back the sector from once again racing ahead.
Vietnam’s non-life insurance market operates under common business laws. Insurers here function as for-profit business ventures and contribute to state revenues. There are, however, no guaranteed renewals and most insurers are state-owned. Regulations evolve reactively to events, unlike proactive European models.
Speaking with Asia Insurance Review, Vietnamese insurance intermediary Insurance-in-Asia Managing Partner Pascal Ho Ba Dam said, “Reforms, however, slowly drive a sustainable and reliable insurance sector. The September 2023 Hanoi mini apartments fire and the Hoi An typhoon floods in 2025 have brought in stricter pricing, risk aligned underwriting and premiums, and broker agent improved and enforced licensing amid price competition and claims.”
He said by making training and licensing mandatory under broker and agent standards, the Ministry of Finance should be able to eliminate unprofessional advice to clients, thus creating a healthier and more professional ecosystem.
Speaking about the motor insurance sector, Mr Ho said, “The 30% fee cut for first-time for online or off-line registrations new cars and EVs, has done lot of good for this line of business. Plus, oversupply has led to cheaper and more cars and thus more insurance sales as well.
“Profitability, however, lags due to limited data sharing by insurers and the central regulatory body on risky drivers and claims over client retention fears. There are no EV-specific premium loading as yet.”
He said, “Health sector is also showing steady growth and expansion via bancassurance. The problem, however, crops up when clients have claims and these are denied. The bankers, who sold the cover, can’t defend their clients.”
Nat CAT market challenges
Speaking about Nat CAT insurance challenges, Mr Ho said, “Vietnam’s Nat CAT insurance market can be described as one with an untapped potential amid low maturity.
“The Vietnamese insurance sector remains underdeveloped, creating high potential demand for Nat CAT coverage – such as floods, typhoons, and fires – but with limited capacity from insurers. In 2025, Nat CAT events in Vietnam caused over 409 fatalities and $3.2bn in economic losses, highlighting the urgency of increasing the insurance cover. However, low penetration is our bane. Non-life insurance penetration is less than 1% of our GDP.”
Mentioning the challenges that impede penetration, Mr Ho said, “There are three key barriers.
Nascent property market:
Vietnam’s real estate sector is an emerging sector, with demand for Nat CAT policies mainly arising from a few foreign invested enterprises driven by their respective headquarters’ risk compliance requirements.
Local insurer constraints:
Vietnamese insurers lack sufficient capital and risk appetite, and the risk of Nat CATs is treated as a minimal ‘tick-the-box’ add-on with premium loadings tied to property risks.
Limited foreign interest:
Low overall demand discourages remaining foreign insurers from developing dedicated products; thus a vicious cycle perpetuates the supply gap.
He said, “This presents an excellent opportunity, especially in reinsurance for Asia-focused investors. Deep-pocketed players’ Nat CAT divisions could make a beginning to underwrite and reinsure these risks, leveraging regulatory reforms and growing resilience needs of the country.
“With insurance premiums surging, strategic entry could yield strong returns while also contribute to building up market maturity.”
New and emerging risks
Speaking about how the Vietnamese insurance industry might address new and emerging risks like cyber, electric vehicles (EVs) and more, Mr Ho said, “Vietnam’s non-life insurance market faces hurdles in managing emerging risks like cyber threats and EVs. Our market is dominated by state-owned players. The sector struggles with data silos and expertise gaps, limiting innovation.”
He said, “Major barriers include reluctance in sharing data, paucity of relevant talent, virtual monopoly and market dominance of some insurers and low risk management awareness, the new risks scenario is virtually exploding.
Data sharing reluctance:
State-owned insurers hesitate to share client, business, or claim data due to competitive fears and sensitivities around public security, censorship, and national champions like VinFast.
New 2025 data law mandates sharing of data with authorities in emergencies but restricts third-party access, exacerbating silos. Recent hacks, like the 2025 Shiny Hunters breach of credit data, highlight vulnerabilities in this approach.
Cybersecurity expertise shortfall:
Cyber risks, including ransomware spillovers, require specialised skills which are scarce in Vietnam’s insurance sector. These specialised skills are generally limited to the government departments and a few BFSI firms.
EV risks and dominance of VinFast:
VinFast holds a near-monopoly. Imposing risk adjusted premiums for electric vehicles based on battery and other vehicle safety issues, could trigger political sensitivities for the insurer. Insurers also lack actuarial data for new products, amid rapid EV adoption.
Broader emerging risk challenges:
Limited knowledge and data availability hinder new and relevant product launches for cyber and EVs in Vietnam. Also, very often frontline insurance sales agents, who are often commission-based ex-state employees in siloed agencies, have little or no incentive to report market trends.
Mr Ho said, “In this scenario, my recommendations for progress of the industry would be to engage global reinsurers to mitigate capital risks and to provide support for undercapitalised local insurers that would enable expansion of insurance coverage expansion.
“The industry also needs to work on launching national awareness campaigns and requests for proposals to boost demand, foster expertise, and encourage data-driven innovations not only in cyber and EV insurance but all emerging risk scenarios.”
AI and Vietnamese insurance
Speaking about the current state of AI adoption by the Vietnamese insurance industry, Mr Ho said, “In my opinion Vietnam’s insurance market is not embracing AI yet in its real sense, despite general announcements often.
“There are six core AI applications in insurance and globally, AI adoption is highest in claims processing. About 50% of insurers use it for fraud detection.”
The main areas of AI deployment in insurance:
- Claims adjudication and processing
- Prior authorisation and utilisation management
- Fraud, waste, and abuse detection
- Predictive analytics for risk management
- Customer service and engagement
- Administrative efficiency and automation
Mr Ho said, “In Vietnam the rate of AI adoption by insurance industry is relatively low due to three main reasons.”
Lack of large-scale data sharing:
AI models need massive local datasets that require collaboration among insurers, often state-owned, to overcome silos. This currently does not exist in Vietnam. Neither the Insurance Association of Vietnam, nor the regulatory body – the Ministry of Finance – can currently impose this actuarial practice like in more developed markets.
Shortage of relevant local talent:
This can be overcome in the short term by hiring specialists to develop Vietnamese-specific large language models and small language models (SLMs). However, this practice is still scarce and not economical very often. In the long term, the industry will need to look at hybrid profiles, non-life insurers and also AI domain specialists.
Ethical data practices:
AI algorithms need clean, logic-based inputs. They can eradicate corruption, and nepotism in claims (faster approvals). They also support profit-sharing schemes (between assessors and garages) through surveillance and audits. AI has strong potential for the market starting with detecting obvious fraud or undue claims and aligning with Vietnam’s push for transparency.
Mr Ho said, “In this emerging market, our focus should be on customising existing small language models for complex claims assessments, incorporating local tricks and tips.
“Building SLMs for client data to aid staff in providing tailored recommendations, addressing semantic gaps between experts and low-literacy customers who struggle with insurance terminology.”
He said this approach will support Vietnam’s digital transformation goals, offering scalable returns for vested investors. A