This is the fastest growing insurance market in Asia

| 09 Jul 2019

Vietnam was the fastest growing market in emerging Asia (ex China) last year, with total premiums surging by 23% to $5.8bn. In comparison, total premiums in the region's emerging markets grew by 6.2%, which was a faster than growth in advanced Asia Pacific (2.6%) and the world (4.8%), according to data from Swiss Re Institute's World Insurance Report.

Life

Life insurance premiums in Vietnam surged 28%, up from a low base and supported by strong promotion through the agency and bancassurance channels. India, the Philippines and Malaysia also reported stable premium growth of around 6-8%.

Manulife Vietnam CEO: All signs point to bright prospects in the insurance industry

Life premiums in emerging Asia (excluding China) increased by 7% in 2018 (2017: +5.8%).

In Thailand and Indonesia, weaker equity markets weighed on performance.

Swiss Re expects life premiums will maintain strong growth momentum of around 6-7% in each of the next two years. The conclusion of elections in India, Indonesia and Thailand should remove some of uncertainties around government policies and economic development.

Swiss Re expects that insurance demand in emerging Asia will shift more towards protection-type products, as low interest rates and volatile risky asset prices continue to undermine the attractiveness of investment products. At the same time, government promotion (eg, in India, Indonesia and Vietnam) of financial inclusive schemes will help insurers gain access to new customer segments, including the low-income population.

In some markets like Thailand, the population is aging rapidly. This will support sales of private pension plans, including annuities.


Non-life

Non-life premium growth in emerging Asia Pacific improved to 11% in 2018 from 8.1% a year earlier. This was based on recoveries in Indonesia and Malaysia, and sustained strong growth in India and Vietnam. Property and motor remain the two largest business lines in the region, both having achieved trend growth in 2018 despite intense competition and soft rates. In India, agriculture insurance continued to be a major growth driver with double-digit increases, as has been the case since the launch of a revised crop insurance scheme by the government in January 2016.

Profitability in many markets remains closely tied to the performance in motor third-party liability (MTPL). In Malaysia, poorer performance in MTPL due to de-tariffication had pushed up the loss ratio in 2017, but there was a slight improvement in 2018.

In Indonesia, on the other hand, sector profitability improved due to a lower claims burden than in 2017. This excludes possible claims from the tsunami that struck Lampung and Banten in late December of last year. According to sigma estimates, total losses were $250m, but only 20% are estimated to be insured. The impact on overall sector profitability, therefore, will likely be limited.

Swiss Re forecasts that non-life premiums in emerging Asia will grow by around 9% annually in 2019/20, supported by ongoing urbanisation and a pipeline of large infrastructure projects.

Agriculture, liability and health insurance lines are expected to outperform. Liability insurance, which currently has a low penetration rate, is showing signs of faster growth on increasing demand for product liability/recall and professional liability covers (eg, D&O and E&O).

Meanwhile, the introduction of universal healthcare schemes in India and Indonesia will offer opportunities to private insurers in the medical segment. Downside risks for emerging Asia stem from possible escalation of US-China trade tensions, which will impact mostly export and trade dependent markets. In Malaysia, Swiss Re expects that ongoing motor de-tariffication will cap growth and profitability over the next two years.
 

Philam Life CEO on narrowing the protection gap in the Philippines