Photo: MB Shinsei
Mr. Ngo Trung Dung, Deputy Secretary General of the Insurance Association of Vietnam, tells VET’s Do Huong about the development of the insurance industry in Vietnam.
by Do Huong
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What do you forecast for growth in Vietnam’s insurance market this year?
We expect growth in life insurance in 2018 to remain at 28-30 per cent, similar to 2017. To achieve this requires major efforts by the life insurance industry, as growth was 29 per cent in 2017 and 32 per cent in 2016. Growth in the insurance industry as a whole is estimated at 20 per cent this year.
What will drive growth in the insurance industry in the years to come?
Vietnam’s life insurance industry has grown at a relatively rapid 30 per cent or so in each of the last three years but the penetration rate was just 1 per cent, or about $3 billion, as at the end of 2017. This is relatively low compared to developed markets.
Around 7-8 per cent of the population have insurance policies, which represents substantial potential in the country.
Awareness about insurance is also improving and is driving the industry forward. Vietnam’s middle class is also growing, and the country’s population is aging rather quickly. Other factors include international cooperation, with many foreigners investing in Vietnam and creating competition in the insurance market. These drive market development as well as revenue growth.
What does the future hold for the insurance industry?
The future of the insurance industry will be influenced by Industry 4.0, including artificial intelligence (AI), big data, and the Internet of Things (IoT). The market now has a number of companies applying technology to better interact with customers, such as Prudential, Generali, AIA, and FWD, among others.
I think technology will make a significant contribution to the insurance industry in the future, with digital having an impact on development.
How would you comment on bancassurance in Vietnam so far?
Bancassurance has been a very promising insurance channel in Vietnam over recent years, though it’s been primarily via agents. Premiums generated through bank accounts last year accounted for about 7 per cent of the total. Though the channel remains modest at this time, it’s growing quickly.
What is the key to success in bancassurance?
The key characteristic of bancassurance is combining the advantages of the bank and the insurer. As the bank lends to the borrower, it wants to have security and so asks that insurance be taken out. The channel also creates more revenue and income for bank employees.
For the insurer, banccasurance is a good distribution channel for increasing its premium revenue. There are currently two forms of cooperation between banks and insurers: a bank may have an exclusive strategic partnership with an insurer (to sell insurance products for only that insurer) or may have cooperation agreements with several insurers.
Are human resources a challenge in bancassurance?
To be able to be agents or consultants selling insurance for insurers, bank employees involved must meet regulations relating to insurance agents, as stipulated in Circular No. 86/2014 instructing the insurance agency activities of banks and credit institutions.
- Life insurance