It is getting more and more difficult to to increase premium income from traditional business lines, therefore, non-life insurers are expanding their “playground” to new insurance business segments.

Export credit insurance, agriculture insurance, guarantee insurance, liability insurance, directors and officer liability insurance are the new targets of many non-life insurers. These business lines are not entirely new, however, not many insurers have written these lines. Export credit insurance and agriculture insurance are encouraged to be implemented more extensively. So far, both of these business lines have ended their pilot time.

According to the Ministry of Industry and Trade, the number of policyholders of export credit insurance is not much. If insurers provide coverage for these policyholders, the probability of loss is large and does not meet the law of large numbers, therefore it is not appealing to insurers. Loss ratio for export credit insurance in the first phase of deployment is relatively high.

For agriculture insurance, besides the results achieved, there are still many difficulties and certain limitations. At the end of pilot time, agriculture insurance had a loss of more than USD22 billion, natural disasters and epidemics risk occuring unusually widespread have made insurance companies bear heavy losses. Meanwhile, insurers have difficulties in placing reinsurance. Because of aquatic disease risks, there is few foreign reinsurers accepted reinsurance. Therefore, after the pilot time, insurers and authorities are considering plans to deploy this type of insurance more reasonably.

For guarantee insurance or directors and officer liability insurance, the room to grow is still large so many insurers have joined to fill up this room. According to the insurers, the initial results are modest; each insurer has only a few dozen contracts. However, insurers will continue making efforts to unfreeze the new segment although it will take much time.

Along with efforts to expand to new insurance business segments above, according to Decree 67/2014/ND-CP on some fisheries development policy effective from the date of August 25^th 2014 to the end of 2016, there will be many policies relating to the insurance industry on the implementation of insurance for fishermen. This is a practical policy of the State to assist fishermen at sea. The insurers are very supportive of this policy. However, when starting to implement the program, there were some difficulties and problems. In specific: To get premium subsidy from the Government, the shipowner must join the fleets, but this is contrary to common practice of fishermen (confidentiality reason). The disbursement of funds for the purchase of insurance policy is also a big problem. This is in fact drawn from experience of deploying pilot agricultural insurance. In addition, the identification, investigation of reasons for accident or damage to vessels when they are offshore is

difficult. It is very difficult to monitor this issue so insurance fraud can occur.  

Given these issues, insurers also have to allocate many resources. Currently, there are 28 coastal provinces nationwide but the Ministry of Finance only allows some insurers to directly deploy this scheme in the form of co-insurance. Each enterprise may have to be the leading insurer in some provinces and follower in the remaining provinces.

The leading insurer will have to implement all underwriting processes including: issuing policy, reinsurance placement, monitoring premium collection, accounting and allocation in co-insurance, loss survey and claims handling, collecting claims from reinsurers, etc. for all the businesses in the assigned provinces, therefore, insurers have to be very well-prepared in terms of financial budget, human resources as well as underwriting management system. In addition, insurers are under high pressure in handling claims timely.

(According to Investment Review)