(Tiểu luận) topic life insurancemarket in vietnam

DEPARTMENT OF COMMERCIAL FINANCE

TOPIC: LIFE INSURANCEMARKET IN VIETNAM

Lecturer: MsC.Tang My Sang Class: FIN1101.A06E Group: 02

Tran Duy Thanh ThuanDoan Mai Ky DuyenTran Hoang Linh GiangTran Dang KhoaHo Yen Nga

TABLE OF CONTENTS

I OVERVIEW OF LIFE INSURANCE 3

1 HISTORY OF LIFE INSURANCE IN VIETNAM 3

2 LIFE INSURANCE CONCEPTS 3

3 THE ROLE OF LIFE INSURANCE 4

3.1Life insurance for your family and yourself 4

3.2Life insurance for the economy 4

3.3Life insurance in the insurance sector 5

4 CLASSIFICATION OF LIFE INSURANCE BY INSURANCE RISK 6

4.1Term insurance 6

4.2Term life insurance 7

4.3Lifetime insurance 7

4.4Mixed life insurance 8

5 CLASSIFICATION OF LIFE INSURANCE BY MODE OF INSURANCE PARTICIPATION 8

5.1Personal insurance 8

5.2Group insurance 8

6 CLASSIFICATION OF LIFE INSURANCE BY CONTRACT TERM 8

II OPERATIONAL STATUS OF VIETNAM LIFE INSURANCE MARKET 9

1 LIFE INSURANCE PREMIUM REVENUE AS OF UN J 2022 9

2 PROSPECTS AND TRENDS OF VIETNAM’S INSURANCE MARKET IN 2022 11

2.1Market Outlook 11

3 SWOT ANALYSIS OF LIFE INSURANCE MARKET IN VIETNAM 13

III.PROPOSING SOLUTIONS TO IMPROVE THE OPERATION OF VIETNAM’S INSURANCE MARKET 14

I Overview of life insurance

1 History of life insurance in Vietnam

In our country, the former Vietnam Insurance Company and the current Vietnam Insurance Corporation are the first insurance enterprises of the Socialist State of Vietnam, Bao Viet was born on December 17, 1964 and officially started operation on January 15, 1965 From then until 1993, there was only one insurance enterprise in our country, Bao Viet Insurance Corporation under the Ministry of Finance In recent years, our Party and State have carried out the economic renovation, gradually transforming the centrally planned economy to a market economy under the management of the State necessary prerequisites for transitioning to a new period of economic development, accelerating the industrialization and modernization of the country The line of economic renovation, building a multi-sector economy according to the market mechanism with socialist orientation has been shown in the field of commercial insurance, specifically on December 18, 1993, the Government of the Socialist Republic of Vietnam The Socialist Republic of Vietnam has issued Decree 100/CP on insurance business This is the first specialized legal document to lay the foundation for the law on insurance in the market economy This Decree is an important turning point declaring an end to the state monopoly on insurance business in Vietnam According to this decree, insurance enterprises can be state-owned enterprises, joint-stock enterprises, mutual insurance associations, joint ventures with foreign countries, branches or companies with 100% foreign capital And it can be said that this is the beginning of the "liberalization" and opening of the Vietnamese market.

In 1999 with the participation of a number of foreign-owned life insurance companies, the Vietnamese life insurance market became more vibrant and richer Helping people choose the most suitable insurance product for themselves.

With a deep awareness of the role and importance of life insurance, in recent years the Government and the Ministry of Finance have paid great attention to developing the insurance business With the establishment of the first official life insurance company in Vietnam in 1996, it clearly confirmed the interest of state agencies at the macro level.

2 Life insurance concepts

Life insurance is a form that has been around for a long time and is well received by people in developed countries with a very high participation rate.

Life insurance is a product provided by an insurance company to protect the insured against death due to health and life by paying and indemnifying when insurance-related events occur.

Life insurance is a commitment between the insurer and the insured, in which the insurer will pay the participant or the beneficiary of the insurance benefits a certain amount upon the occurrence of a specified event prior to the occurrence and the participant must pay the insurance premium in full and on time In other words, life insurance is the process of insuring risks related to human life, life and longevity.

3 The role of life insurance

3.1Life insurance for your family and yourself

Financial protection of the family: participating in life insurance is the best way to protect the family's finances against risks such as illness, accident, death

Create a savings fund for the future: if the customer is lucky to not have any problems during the contract term, they will receive the maturity benefit back.

Financially prepare for a comfortable retirement: help you have a comfortable vacation by paying a premium each month.

3.2Life insurance for the economy

Firstly: Life insurance contributes to financial stability for participants or beneficiaries

of insurance benefits.

Risk is an unpredictable thing in every person's life, the more developed the society, the more opportunities there are, but it also means that there are many risks that threaten human life, leading to financial instability for individuals family as well as society When an unfortunate accident occurs, if you participate in life insurance, yourself or your relatives and family will be financially guaranteed to partially compensate for the loss caused by the risk When the risk does not occur, through a number of other types of products such as pension insurance, mixed insurance, etc., participants still receive the insurance amount along with interest to use for the future higher human needs.

Second: Life insurance contributes to reducing the burden on the State budget and

increasing benefits for employees.

Previously, during the annual subsidy period, the State budget had to spend a large amount of money to pay individuals and companies at risk in the form of benefits (sickness allowance, job loss allowance, etc.) , ) These expenditures both make a deficit of the State budget, sometimes even cause the psychology of not trying because someone else is responsible for helping them to individuals as well as organizations Today, when life insurance is born, participants can protect themselves, proactively deal with risks while creating a savings In addition, participating in voluntary pension insurance, employees also enjoy retirement benefits, can take care of themselves, reducing the burden on family and society.

Third: Life insurance is an effective investment attraction tool.

The premiums in life insurance are quite large, thanks to the characteristics as well as the great benefits when participating in life insurance, today people are more and more interested in life insurance, since then the amount of capital mobilized from population is increased Vietnam is in the renovation period "Industrialization - modernization" the country to serve economic development requires a huge amount of investment capital Because of the awareness of the importance of life insurance, our State has continuously had policies to facilitate the development of life insurance, an important step forward is the permission of insurance companies Foreign life insurers entered Vietnam's life insurance market and the introduction of the insurance law on December 7, 2000 This is one of the State's measures to create abundant capital sources for investment and

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development of the country with the policy of mainly relying on internal resources and taking advantage of external resources Through life insurance, it is possible that in the coming time, it will gradually attract idle capital in the population because this amount of money is expected to reach more than 10 billion (reserved in the form of foreign currency as well as gold) In addition, when foreign life insurance companies enter the Vietnamese insurance market, the capital they invest in will also be very large In addition, because the characteristics of life insurance are long-term, the capital raised can be invested for a while now is considered the best source of capital for economic projects great.

Fourth: Life insurance creates a large number of jobs for workers.

Every year, the number of graduates alone is also a challenge for society, employment is always a hot issue when the number of people without work is increasing and in which, in addition to those without qualifications, there are also there are many qualified people who are not used for the right purpose Life insurance activities need a very large network of insurance agents, IT staffs, finance, accounting, economic management Therefore, the development of life insurance has contributed create more jobs, reduce the number of

unemployed people, reduce the burden on the State budget.

Fifth: Life insurance is a reasonable investment measure for education and contributes to creating a new habit and lifestyle.

For developing countries like Vietnam, investment in education is very important and must be considered the foundation of development However, the cost of education is increasing day by day, but resources are very limited, besides educational support measures such as calling for and aid from domestic and foreign agencies, and credit loans for students Due to the temporary and unstable nature, participating in An Sinh insurance for education is a reasonable measure to invest in children's education thanks to the family's regular savings The goal of social justice because investing in their children's future is not only the responsibility of society but also the responsibility of each family In addition, participating in life insurance also shows a beautiful lifestyle by creating for each person the habit of saving, worrying about the future of their loved ones, and at the same time educating their children to know how to save and live responsibly towards others.

Participating in life insurance not only creates benefits for yourself, but also benefits your loved ones while contributing to the development of society People are the determining factor of development Therefore, the implementation of strategies and policies on people is extremely important, and the implementation of life insurance is the implementation of the comprehensive human development strategy of the Party and State.

It can be said that life insurance has contributed significantly to solving a number of social problems such as education, poverty alleviation, unemployment reduction, compensation for losses and misfortunes in life, contributing to reducing the burden of poverty heavy social responsibility for employees, the elderly

3.3Life insurance in the insurance sector

Firstly: Life insurance is one of the earliest types of insurance.

Commercial insurance in the world has a history of development more than 500 years Insurance works on the principle of "the majority for the few", which is the hesitant sharing of a large number of people and some of them unfortunately encountering risks Insurance was born as an effective measure to deal with important existing risks Insurance participation is increasingly becoming an indispensable activity for business owners, a good habit among the people.

Initially, insurance only stopped in some forms such as fire insurance, marine insurance Up to now, insurance has developed very strongly with very rich and diverse insurance types is increasingly proving its position in the general insurance market.

Second: Life insurance is growing stronger and becoming an important and indispensable part of the insurance market.

In fact, the growth rate of life insurance industry in the world is constantly increasing and accounts for a large proportion of revenue in total revenue of insurance operations However, the growth rate of life insurance is very uneven If in Latin America the premium from life insurance business is very low, accounting for only 21.4%, in Europe life insurance premiums reach a balance rate from 41.8% to 41% 49.3%, while the proportion of life insurance premiums in Oceania accounted for 52.3% of the total premium revenue.

In summary, whether from an objective or subjective perspective, we must also admit that life insurance is still growing and affirming its important position in the insurance market in particular and in the economy countries and the world economy in general.

4 Classification of life insurance by insurance risk

4.1Term insurance

Also called temporary life insurance or term life insurance This type of insurance is contracted for death that occurs within the specified period of the policy If death does not occur within that period, the insured does not receive any money It also means that the insurer does not have to pay the insured amount to the insured Conversely, if something has not happened within the effective term of the contract, the insurer is responsible for paying the insured amount to the beneficiary of the insurance benefits specified by her This type of insurance is diversified into the following types:

Fixed term life insurance Renewable term life insurance Convertible term life insurance Decreasing term life insurance Term life insurance increasing Family income insurance Family income insurance increased Conditional term life insurance

Fixed term of insurance

Responsibilities and rights are temporary

The premium is low because there is no need to set up a savings fund for the insured

Covering funeral and burial expenses Sponsor family and loved ones for a short time Payment of debts on loans or mortgages of the insured.

4.2Term life insurance

The essence of this type of insurance is that the insurer undertakes to pay regular sums for a specified period or throughout the life of the insured If the insured person dies before the payment date or due date, no amount will be paid.

Secure a fixed income when you retire or when you are old and weak Reducing the need to depend on social welfare or children in old age Support the standard of living for the remaining years of life

4.3Lifetime insurance

Whole life insurance is a type of life insurance in which the insurance period is indefinite and the sum insured is paid to the heirs upon the death of the insured In addition, in some cases, this type of insurance also guarantees to pay the insured as soon as they live to the age of 99 This type of contract usually has the following types of contracts:

- Non-profit whole life insurance - Whole life insurance with profit sharing - Continuous premium life insurance - Life insurance with a one-time premium

- Life insurance with a stipulation of the number of premium payments

Where the insurance money is paid once upon the death of the insured Insurance period indefinite

Premiums can be paid once or periodically and remain unchanged throughout the insurance period

Premiums are higher than for life with a term because eviction and death are certain to occur, so the amount of insurance must be paid.

Guaranteed income to stabilize family life

Preserve assets, create and start a business for the next generation 4.4Mixed life insurance

Mixed life insurance is a combination of insurance and savings, the sum insured will be paid when the insured dies or lives to the maturity of the policy and a predetermined period of coverage, where at the maturity of the policy and depends on the performance brought about by the premium investment and chosen by the insured.

Depending on their different needs and financial capabilities, each person can choose for themselves a life insurance product that is suitable for their purposes In this mixed life insurance, the element of risk and saving oil lamps is therefore widely applied in most countries around the world.

The sum insured is paid when: the policy expires or the insured dies during the insurance period.

Fixed term of insurance: usually 10 years, 10 years, 20 years…

Premiums are usually paid periodically and do not change throughout the insurance period.

Profits can be shared through premium investment and can also be refunded when there is no condition to continue participating.

Ensure stable life for family and loved ones Creation of education, retirement, debt repayment.

When rolling out mixed life insurance, insurers can diversify this product category with policies of different durations, not-for-profit, for-profit policies, and other policies depending on their preferences, actual situation.

5 Classification of life insurance by mode of insurance participation

5.1Personal insurance

It is a type of personal insurance carried out in the form of an individual insured Usually voluntary insurance is insured by individuals.

5.2Group insurance

A type of personal insurance in the form of a collective with a list of insured individuals For example, a collective of officers and employees of an enterprise are entitled to purchase personal insurance with a list of individuals who are fully insured and die or unexpected accident insurance to ensure production safety labor.

6 Classification of life insurance by contract term

In life insurance, life insurance is used to refer to a type of life insurance with a long-term nature ( > 1 year) In addition, there are accompanying products for the main product, which are additional products, there are many products with a term of more than one year, after one year, the contract is renewed for example: hospital supply market, expenses surgery, permanent partial injury insurance due to accident…

II Operational status of Vietnam life insurance market

(estimated data as of June 2022) After more than two years of facing COVID-19, the global economy as well as Vietnam is gradually returning to the next normal period The passing of the crisis also offers opportunities to reinvent themselves with insurers, after a period of sleep, offering a variety of solutions to protect customers, helping them fight the battle against COVID-19 In fact, through the pandemic, customers are also well aware of the benefits of insurance Top 10 reputable life insurance companies in 2022 (as of July 2022)

Source: Vietnam Report

1 Life insurance premium revenue as of Jun 2022

Total new insurance premium revenue for the whole market in the first half of the year was estimated at VND 25,111 billion, down 2.3% over the same period last year In which, leading in terms of new insurance premium revenue is Manulife with 4,685 billion VND, Prudential with 4,490 billion VND, Dai-ichi Life with 3,322 billion VND, Bao Viet Life with 2,678 billion VND and MB Ageas with 2,179 billions dong By the end of the second quarter, the total insurance premium revenue of the whole market was estimated at VND 84,467 billion, up 15.7% over the same period last year In which, universal life insurance products accounted for 51.5%; mixed insurance products accounted for 16.6%; unit-linked insurance products accounted for 20.4%; By-products account for 10.0%.

The remaining insurance products accounted for 1.52% In which, life insurance products accounted for 0.2%, life insurance products accounted for 0.6%, periodic payment products accounted for 0.1%, retirement insurance products accounted for 0 2%, health insurance products account for 0.48%, term life insurance products account for 0.006% In terms of total premium revenue and market share of insurers in the market, although Bao Viet Life is still leading in both criteria (VND 16,222 billion and 19.20%), this business is standing facing stiff competition from Manulife in second place 15,345 billion dong and 18.17%) and Prudential (13,999 billion dong and 16.57%) Top 10 life insurance enterprises with the highest total revenue and market share

Column2Market share

Source: IAV, Calculation Unit: Billion VND

In terms of revenue structure by product, products accounted for the highest proportion, including universal life insurance products 51.5%, unit-linked insurance operations 20.4%.