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Vietnam Insurance Sector: Untapped Potential
New Delhi, 9th May 2008: In recent years, there has been a significant economic growth in Vietnam of
approximately 7.5% per annum. This growth is attributable to the recently
adopted strategic and long-term initiatives by the Vietnamese government.
These steps have streamlined and improved the economic infrastructure of the
country by offering more incentives for foreign investors and implementing a
10 year socio-economic development plan etc. The country has gradually
migrated from a planned economy to a market based economy by shifting its
focus from agricultural production to industries and services. With all
these developments, Vietnam has become one of the fastest-growing economies
in the world, averaging around 8% annual gross domestic product (GDP) growth
from 1990 to 1997 and 6.5% from 1998-2003. From 2004 to 2007, GDP grew over
8% annually. Vietnam is now able to compete and get counted with regional as
well as global economic countries. There has been a significant increase in
inflows of foreign direct and private investment.
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In the last few years, Vietnamese insurance sector has seen a noticeable
growth. Today, despite being very young, Vietnamese life insurance market
has already overtaken Indonesia and Philippines in terms of market
penetration. This is because Insurance premium forms a larger percentage of
the country's GDP. With opening up of its insurance market since 1996, more
and more foreign insurers are getting access to the highly lucrative
insurance market in Vietnam. Foreign companies can now easily operate in the
country and are forming joint ventures with local companies in order to
enter Vietnam and diversify their clientele . In addition, a range of
foreign life insurers, including some large Asian-based life insurers
(principally from Singapore, Taiwan, China and South Korea), have set up
representative offices in Vietnam and are working toward gaining operating
licenses. Investors from regions like Asia, US and Europe are also actively
lobbying the Vietnamese government for access to the local insurance market.
Upon the country's accession to the World Trade Organization, foreign
insurers expect to be allowed to establish more wholly owned units and to
benefit from progressively declining limitations on their scope of business.
Market Performance & Forecast
In 2000, Insurance sector was valued to be $177.12 million. Within the next
7 years, the total market size of insurance sector in Vietnam was estimated
to be $1141.98 million in 2007; a CAGR growth of 26.23% and an average
growth rate of 33.25% during this tenure. Going forward, we are expecting a
CAGR growth of around 12.30% in the Vietnamese Insurance Sector between 2007
and 2011. The Knowledge Centre predicts that during this time period, the
market from $1141.98 million will grow at an average rate of 16.25% and
reach $2039.95 million by the end of 2011.
Between 2000 and 2007, Vietnamese life insurance sector increased from
$51.12 million to $586.24 million, CAGR growth of 35.65% during this period.
We forecast that the life insurance market in Vietnam would grow at a CAGR
of 10.71% and an annual average growth rate of 13.21% between 2007 and 2011.
From $596.24 million in 2007, the market will increase by approximately $388
million and reach $975.21 million by the end of 2011.
Non-life premiums in Vietnam were estimated to be $555.74 million in 2007, a
growth of $429.74 million from the market size of $126.00 million in year
2000. Between 2007 and 2011, we project a CAGR of 13.89% .i.e. from $555.74
million in 2007; the non-life insurance sector in Vietnam will reach
$1064.75 million.
According to the Vietnam Insurance Associati on, there are 120,000 insurance
agents and 10,000 employees in the country. There are currently 16 non-life
insurers, eight life insurers and seven insurance brokers. Vietnam's life
insurers offer about 100 products and generated premium income. Fifteen
foreign insurers have established operations and 30 others have
representative offices. Foreign-owned insurers dominate the life insurance
market. Domestic insurers are more dominant in the non-life insurance market
and foreign insurers hold only a 7 percent market share. Some of the top
insurance companies in Vietnam are ACE Life Insurance Co., Ltd., AIG General
Insurance (Vietnam) Company Limited, Bao Viet Holdings, Bao Minh,
Groupama/GAN, Nipponkoa Insurance Co., Ltd., Prudential Vietnam Assurance,
Petrolimex Joint Stock Insurance Company (PJICO), Petrovietnam Insurance
Company (PVIC), and QBE Insurance (Vietnam) Company Limited etc.
Major Driving Factors
=> Economic growth above 8 percent
=> Entry to the World Trade Organization (WTO) => Opening up of insurance
market for foreign investments => US-Vietnam bilateral trade agreement in
2001 => Emerging middle class & increasing literacy rate => Increasing
foreign direct investments => And many more.
Major Issues & Trends
=> Foreign investors targeting Vietnamese Insurance Sector => Foreign
companies trying to capture Vietnamese Market => Insurance still in a
nascent stage due to traditional mindset => Lack of infrastructure and
support => Setting up of a national export-credit insurance organisation =>
Demand for risk prevention increasing => Staffing concerns in insurance
companies => Establishment of the Laos-Vietnam Insurance Joint Venture (LVI)
=> Recent developments at Bao Viet => And many more.
Topics covered in the report
=> Economic performance of Vietnam
=> Recent economic policies of the Communist Party => Macroeconomic trends
and drivers => Focus on increasing Foreign Direct Investments an d opening
up of insurance market => Past and present scenario of Vietnamese Insurance
Market & Future Outlook => Past and present scenario of Vietnamese Life
Insurance Market & Future Outlook => Past and present scenario of Vietnamese
Non-Life Insurance Market & Future Outlook => Driving factors for Vietnamese
Insurance Market => Entry in WTO => Setting up of a national export-credit
insurance organisation => Establishment of the Laos-Vietnam Insurance Joint
Venture (LVI) => Government strategic initiatives to strengthen Insurance
Market => Competitive Landscape & Market Share of foreign and domestic
players => Recent developments in Bao Viet => Company profiles of top
players => And many more.
Table of Contents
1. VIETNAM
1.1 VIETNAMESE ECONOMY
1.2 GOVERNMENT POLICIES
2. INSURANCE SECTOR
2.1 MARKET OVERVIEW
2.2 MARKET SEGMENTATION & PERFORMANCE
2.2.1 Vietnamese Insurance Market
2.2.1.1 Life Insurance Sector
2.2.1.2 Non-Life Insurance Sector
2.3 DRIVING FACTORS
2.3.1 Recent catalysts
2.3.2 Young and vibrant population
2.3.3 Emerging middles class
2.3.4 Literacy rate
2.3.5 War of talent
2.3.6 Increasing foreign direct investment (FDI)
2.4 TRENDS, ISSUES AND OPPORTUNITIES - AN ANALYSIS
2.4.1 Foreign investors targeting Vietnamese Insurance Sector
2.4.2 Entry in WTO
2.4.3 Foreign companies trying to capture Vietnamese Market
2.4.4 Traditional mindset of the people - Insurance still in a nascent stage
2.4.5 Inadequate basic infrastructure and support
2.4.6 Underselling to capture market
2.4.7 Setting up of a national export-credit insurance organisation
2.4.8 Underlying opportunity for life insurance policies - need for risk
prevention
2.4.9 Entry of foreign players & staffing concerns 2.4.10 Historical
economic growth trends
2.4.11 Establishment of the Laos-Vietnam Insurance Joint Venture (LVI)
2.4.12 Factors driving investment decisions2.4.13 Transformation at Bao Viet
2.4.14 HSBC enters strategic relationship with top Vietnam insurer, Bao Viet
2.5 GOVERNMENT REGULATIONS
2.6 COMPETITIVE LANDSCAPE & MARKET SHARE
2.6.1 Company Profiles
2.6.1.1 ACE Life Insurance Co., Ltd.
2.6.1.2 AIG General Insurance (Vietnam) Company Limited
2.6.1.3 Bao Viet Holdings
2.6.1.4 Bao Minh
2.6.1.5 Groupama/GAN
2.6.1.6 Nipponkoa Insurance Co., Ltd.
2.6.1.7 Prudential Vietnam Assurance
2.6.1.8 Petrolimex Joint Stock Insurance Company (PJICO)
2.6.1.9 Petrovietnam Insurance Company (PVIC) 2.6.1.10 QBE Insurance
(Vietnam) Company Limited
Pages: 107; Format: PDF
Authors: Akash Rakyan & Nishith Srivastava
List of Charts
Chart 1: Macroeconomic Data: Population (mil.) vs. Nominal GDP ($ billions):
2002-2011 Chart 2: Macroeconomic Data: GDP per capital ($mil.) vs. Real GDP
Growth (%): 2002-2011 Chart 3: Vietnam Insurance Market ($million):
2000-2007e Chart 4: Vietnam Insurance Market Forecast ($million):
2007e-2011f Chart 5: Vietnam Life Insurance Market Value ($million):
2000-2007e Chart 6: Vietnam Life Insurance Market Value Forecast ($million):
2007e-2011f Chart 7: Vietnam Non-Life Insurance Market Value ($million):
2000-2007e Chart 8: Vietnam Non-Life Insurance Market Value Forecast
($million): 2007e-2011f Chart 9: Market Share of Life Insurance Companies in
Vietnam Chart 10: Market Share of Non-Life Insurance Companies in Vietnam
List of Tables
Table 1: Macroeconomic Data: Population (mil.) vs. Nominal GDP ($ billions):
2002-2011 Table 2: Macroeconomic Data: GDP per capital ($mil.) vs. Real GDP
Growth (%): 2002-2011 Table 3: Vietnam Insurance Market ($million):
2000-2007e Table 4: Vietnam Insurance Market Forecast ($million):
2007e-2011f Table 5: Vietnam Life Insurance Market Value ($million):
2000-2007e Table 6: Vietnam Life Insurance Market Value Forecast ($million):
2007e-2011f Table 7: Vietnam Non-Life Insurance Market Value ($million):
2000-2007e Table 8: Vietnam Life Insurance Market Value Forecast ($million):
2007e-2011
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