Posted on Oct 12, 2010 by Sergio Ulloa
A research report entitled "Vietnam Insurance Sector Forecast to 2013" by RNCOS, an India-based market research and information analysis company, predicts that the growth in the insurance market in Vietnam will continue being dominated by the non-life insurance segment, which currently accounts for more than 50 percent of the insurance market. The report projects a Compound Annual Growth Rate (CAGR) of around 25 percent between the years 2010 and 2013.
During the past few years, the non-life insurance segment of the Vietnamese insurance market has shown robust growth, with strong demand for motor vehicle, property and health insurance products. The prospective growth for the 2010-2013 period mentioned in the report is attributed to the continued demand for these insurance products.
The report also highlights the anticipated high growth of the Vietnamese insurance market in the near future, due to the huge exploitation potential perceived by the life insurance industry. It is estimated that just around 5 percent of the Vietnamese population are currently protected with life insurance cover, whilst around 30 percent of the population actually have the economic means to afford buying a life insurance policy.
Other major factors driving up the growth in the Vietnamese insurance market identified by the research include the increased demand for insurance products coupled with saving elements such as endowments and investment-linked life insurance policies, which are identified as a range of emerging segments destined for growth, according to the report. The report attributes the shifting of interest towards the more sophisticated insurance products to the increased awareness of the general population in Vietnam about the need for insurance, coupled to their rising income levels.
Additionally, all major players in the life insurance industry in Vietnam are of foreign origin, accounting for approximately two thirds of the life insurance market. This is due to the large capital outlays required to set up a life insurance company, which prevents the domestic applicants from participating.
Despite the growth in the non-life insurance segment, appreciated even in small and newly-established insurers, the challenges ahead come in the form of financial and human resources, together with technological expertise. The lack of these key resources, mostly by the domestic insurance enterprises, renders them unable to meet the increasing demand for new insurance products of higher quality.
In general, the report identifies the non-life insurance segment as the growth driver of the Vietnamese insurance market in the next few years.
RNCOS specializes in Industry intelligence and creative solutions for contemporary business segments. The professionals at RNCOS study and analyse the industry and its various components, with comprehensive study of the changing market behaviour. The accuracy and data precision delivered by RCOS proves beneficial in terms of pricing and time management that assist the consultants in meeting their objectives in a cost-effective and timely manner.