The Covid-19 pandemic has had a major impact on almost all economic sectors since 2020. However, with the Government’s good control over the pandemic, our economy has also seen significant recovery steps in 2020 and the first half of 2021. GDP posted a growth of 2.91% in 2020 (belonging to the world’s highest-growing countries) and 5.64% in the first 6 months of 2021

Total premium volume of the insurance market was estimated to increase by 24% over the same period in 2020 to reach VND 102,980 billion, of which non-life sector increased by 10% to VND 29,957 billion, and life sector increased by 30% to VND 73,022 billion.

Distribution channel

Banks continue to be the main distribution channel for insurance businesses, both life and non-life, especially in life insurance market as exclusive insurance contracts not only bring large and stable source of customers for insurance enterprises but also generate thousands of billions dong of inflow for banks. For non-life insurance, currently, the distribution channel through banks is still focusing on personal products that are said to be simple and easy to sell such as health, motor, private home insurance.

Besides, e-commerce has been a new distribution channel since 2020. While traditional selling methods facing with fierce competition in terms of costs, especially with banca channels, as well as limitations in face-to-face contact due to social distancing measures, product distribution through e-commerce channels like Lazada, Tiki, ect. are considered a lifeline for businesses, making a difference in competition.

Along with e-commerce platforms, multi-service applications such as Grab, Be, ect have begun to cooperate with insurers to deploy insurance packages specifically designed for customers using their services (mainly accident insurance), in addition, e-wallets (Momo, Vnpay, Moca, etc.) are actively involved in the distribution of personal insurance products.

Market share

Despite being directly impacted by the Covid-19 pandemic since 2020 with a sharp decrease in growth, personal insurance products (personal accident/health and motor) continued to play a pivotal role in the premium volume of most inssurers. These two business lines accounted for 58% of the market premium volume in the first 6 months of 2021 (compared to 60% of the same period in 2020).

As being heavily affected by the pandemic and seeing few clear signs of recovery in the first 6 months of 2021, written premium of the personal/health insurance only grew by more than 9% and motor insurance only increased by about 1.25%.

Written premium of Personal Accidents for bank loan holders increased by about 2.4% in comparison with the same period of 2020. Concerns about the negative impact of the pandemic lead to the increase in people’s demand for health insurance products in 2020 and this trend continued in the first 6 months of 2021, thus the written premium of health insurance grew by more than 17%.

Among traditional commercial insurance business lines, Cargo and Aviation were the two lines most affected by the Covid-19 pandemic in the first half of 2020 which decreased by 11% and 16% respectively due to the strict social distancing measures of several countries (including Vietnam). However, with the Government’s effective control and management measures, the socio-economic situation had quite positive changes in the first months of 2021. Marine and Aviation insurance were the business lines that benefited greatly from these positive signals when they saw a good recovery with growth rate of 22% and 39% respectively. However, this growth also came from the accounting of premium volume between payment periods (extension of premium payment period), especially for Aviation business, which is expected to be heavily affected in the third quarter of 2021 due to the severe impacts of the fourth wave of the Covid-19 pandemic.

After a short period of hot growth during the period 2018 – 2019 thanks to the impact of Decree 23, Property returned to a stable growth of about 24% in the first half of 2021. Engineering continued the recovery trend with most of the large insurance companies (which hold the dominant market share) recording a positive double-digit growth in terms of preium volume. Premium volume from Engineering was estimated to grow by more than 9% in the first half of 2021. However, in general, the premium volume of commercial insurance products continued the downward trend, even in the leading insurance companies. Regarding some small businesses who determined to focus on personal insurance products (personal insurance, motor), the proportion of commercial insurance products may account for less than 10%.

SHARE OF NON-LIFE INSURANCE IN 1H 2021

Loss picture

According to Insurance Association of Vietnam, the total amount of paid losses of the market in the first half of 2021 was about VND 9,600 billion, loss ratio was more than 32% (compared to the rate of 33.5% of the same period of 2020).

In general, the number of large losses in the first 6 months of 2021 decreased significantly compared to the same period of 2020 in both frequency and severity. Property continued to see many large losses with losses estimated at millions of USD such as Dreamtech, Dong Tien Paper, Arirang Chemical Company. Harsh competition was still going on in Property and premium tariff was still on downward trend. Besides, risk quality and risk assessment which have been considered to be the main reasons of unimprovements in Propety loss picture for many consecutive years, have always remained a dilemma in the Vietnamese market. Recently, the rising of ethical/fraudulent risks in compensation, especially in Property losses is still of great concerns as the clients are all in difficulties in doing their business due to impacts of the pandemic.