Vietnamese insurance market 2020 has closed a bumpy year with impressive growth while most of other industries have suffered several negative impacts from the Covid pandemic.
According to Ministry of Finance, the insurance industry estimates a growth rate of 15% with total estimated premium volume of about VND184,662 billion, in which VND57,102 billion comes from the non-life sector which grows by 8% compared to 2019, whilst, VND127,560 billion comes from life sector, increasing by 19.6% against 2019.
According to the ISA, the above-mentioned encouraging results were achieved thanks to the efforts of the whole industry as well as the remedies by the government. In pursuing the dual goals – controlling pandemic and recovering the economy – the Government has implemented a series of solutions and policies to support and alleviate difficulties for the people and enterprises. Good control over the pandemic has also facilitated the entrepreneurial community in general and insurers in particular to recover and revive their business operations.
The Ministry of Finance (Insurance Supervisory Authority) has promptly completed policies to support the market development. On 11/11/2020, the Ministry of Finance issued Circular No. 89/2020/TT-BTC amending and supplementing 4 Circulars on insurance business, including the amendments to provisions on technical reserves which can help insurers to reduce pressure on capital in the short term and have enough time to implement overall financial plan to stabilize their business in the context of a sharp drop in interest rates and government bond yields and unpredictable developments of Covid-19 pandemic.
Looking back at the past five years, Vietnam insurance industry posted an average growth rate of 22%, with non-life sector growing 13% and life sector 28% according to the Insurance Association of Vietnam.
However, the current penetration of the insurance industry is only 3.07% of GDP, lower than the average of the ASEAN (3.35%), Asia (5.37%) and the world (6.3%). There is still a big protection gap in natural catastrophe, public assets, life and health insurance.
The Insurance Supervisory Authority (ISA), Ministry of Finance, expect a lot on the changes of the market in the coming time when the legal framework of the insurance industry is accomplished, and thus, a transparent business environment favorable for the development of the market will be created following various international commitments. ISA also projected the insurance market will have average growth rate of 15% between 2021 – 2025 with a penetration rate of 3.5% by 2025.