In early 2023, the prime minister of Vietnam's Decision 07/QD-TTg was issued, approving the strategy to develop the insurance market in the country until 2030. The application of technology in the insurance industry was covered in the document, with the prime minister requesting the formation of a regulatory sandbox in order to encourage companies to develop new digital products and services.
A change in Vietnam law pertaining to the distribution and purchase of insurance products through the bancassurance channel is expected to constrain sales growth over the near term, more so for the life sector than for non-life business, according to a new AM Best report.
The year 2024 will see many positive changes in the insurance market, said Vietnam Insurance Association (VIA) deputy secretary-general Ngo Trung Dung, commenting on the industry's expectations and direction in 2024.
A new regulation under the amended Law on Credit Institutions, banning commercial banks from bundling insurance together with banking services, is expected to dent bancassurance revenue.
Hanoi Reinsurance Joint Stock Corporation (Hanoi Re) has posted a pre-tax profit in 2023 of VND256bn ($10.5m), a jump of 35% over 2022. This is a record for Hanoi Re, formerly known as PVI Re, since its establishment in 2011.
2024 is forecast to continue to have many challenges for the insurance industry, but the good news is that there is now a roadmap for the transition of the industry to sustainable growth.
Several banks in Vietnam have reported a decline in bancassurance sales in the first nine months of this year, with the trend expected to continue into the new year, as a consequence of tighter regulatory scrutiny and consumer complaints about mis-selling or forced purchases of insurance policies.
Vietnam's non-life insurance market will likely resume its growth momentum as global demand recovers and benefits the domestic economy, according to Mr Ken Lau, senior financial analyst at AM Best.
The operating performance of Petrolimex Insurance Corporation (PJICO) is regarded as adequate, evidenced by a five-year weighted average return-on-equity ratio and combined ratio of 12.2% and 97.1% (2018-2022), respectively, says AM Best.
Vietnam has joined the ASEAN Compulsory Motor Insurance (ACMI) system, which requires motor vehicle owners from other ASEAN member states transiting or travelling to Vietnam to register for compulsory third-party liability insurance.