According to the Ministry of Finance, health insurance accounted for the highest proportion of gross premiums in 2021, with 32.05%, followed by automobile insurance 27.44%, property and
Introduction
The insurance market encompasses a variety of policies designed to protect individuals and organizations from financial losses due to unforeseen events, primarily divided into non-life insurance and life insurance Non-life insurance, also known as general, property, or casualty insurance, covers assets and liabilities, including automobile, health, fire, and liability insurance In contrast, life insurance provides a monetary benefit to the beneficiaries of the insured upon their death or after a specified period, with types including term life, whole life, endowment, and annuity insurance (Martin Hodula, Jan Janků, Martin Časta, Adam Kučera, 2020).
The insurance industry in Vietnam is rapidly growing, with a total gross premium of approximately 186.22 trillion VND (8.1 billion USD) in 2021, reflecting a 16.3% increase from the previous year However, the Covid-19 pandemic has significantly affected both supply and demand, leading to substantial adjustments and challenges within the sector.
On the supply side, the pandemic has accelerated the adoption of digital technologies and innovation in the insurance sector, such as online sales channels,
10 mobile applications, blockchain, artificial intelligence, and big data analytics These technologies have helped improve customer service, operational efficiency, risk management, and fraud prevention
The pandemic has significantly heightened awareness and demand for insurance products, particularly health and life insurance, as individuals confront increased health risks and uncertainties In 2021, health insurance represented the largest share of gross premiums at 32.05%, followed by automobile insurance at 27.44%, property and casualty insurance at 13.12%, and fire and engineering insurance at 10.01%, according to the Ministry of Finance's annual report on the Vietnam insurance market Conversely, the demand for non-life insurance products, including travel and business interruption insurance, has seen a decline due to mobility restrictions and economic disruptions.
During the pandemic, the Vietnamese government has significantly contributed to the growth of the insurance sector by implementing laws and regulations that support both insurance providers and clients in managing the risks and challenges posed by COVID-19.
In summary, the Vietnam insurance industry has demonstrated impressive resilience and adaptability during the Covid-19 pandemic, successfully modernizing its operations and products while expanding its market reach This growth has significantly contributed to the country's social and economic development Nonetheless, there remain critical areas for improvement, including the enhancement of data quality and availability, the strengthening of human resource skills, and the addressing of existing gaps in the sector.
11 risks in cyber security, and fostering collaboration among stakeholders in the insurance ecosystem.
Macroeconomic analysis
Political
Vietnam, characterized by stable politics under the dominance of the Communist Party, has effectively managed the COVID-19 pandemic through consistent operations The insurance industry in Vietnam is regulated by the Insurance Supervisory Authority, which operates under the Ministry of Finance, ensuring a structured oversight of insurance-related businesses in the country.
In the Vietnamese insurance market, key laws and regulations include the Enterprise Law and the Insurance Business Law 24/2000/QH10, initially enacted in 2000 and amended to take effect on January 1, 2023 These legal frameworks aim to enhance supervision within the insurance sector, promote fair competition, protect consumers, and encourage innovation and diversification of insurance products Additionally, there are various relevant regulations and decrees issued by the Vietnam Ministry of Finance and the Vietnamese Government that further govern insurance activities.
During and after the COVID-19 pandemic, the Vietnamese government implemented effective policies to sustain and support business activities across various sectors Notably, the government extended crucial measures to aid economic recovery and ensure market stability.
In recent years, the Vietnamese government has implemented various tax measures to support businesses and individuals, particularly in response to the challenges posed by the Covid-19 pandemic Notably, Resolution No 116/2020/QH14 was introduced to reduce corporate income tax for various organizations in 2020 Following this, the National Assembly Standing Committee issued Resolution No 406/NQ-UBTVQH15 in 2021, aimed at providing tax relief and financial assistance to those affected by the pandemic In 2022, Resolution No 43/2022/QH15 was enacted to foster economic recovery and enhance socio-economic development from 2021 to 2025 Additionally, the government’s Decree No 21/2023/ND-CP, effective May 5, 2023, focuses on expanding microinsurance to improve insurance accessibility for low-income and vulnerable populations.
In conclusion, the Vietnamese government is increasingly focused on the insurance industry, which, despite being relatively young and still developing, is poised to become a crucial component of the country's economy in the future.
Economics
2.1 GDP amount and GDP growth in Vietnam
Figure 1 Vietnam GDP and GDP growth from 2017 to 2025f
Gross Domestic Product (GDP) is the total value of all goods and services produced within a country annually, serving as a key indicator of the size and performance of its economy.
2023) According to data from the World Bank, despite the consequences of covid-
19, it is forecasted that Vietnam GDP will keep moving forward in the upcoming years, and Vietnam will still be a developing economy in the region and in the world
Vietnam's GDP growth has shown a declining trend in recent years, reflecting the overall health of its economy According to reports from the World Bank and the Asian Development Bank (ADB), Vietnam experienced a stable GDP growth rate of around 7% annually from 2017 to 2019 However, the resurgence of the Covid-19 pandemic in 2020 and the subsequent lockdowns resulted in a significant drop, with GDP expected to fall from 4.8%, marking a loss of over 2 percentage points.
14 around 2.6% in 2021 As soon as covid-19 was controlled successfully in Vietnam, GDP growth returned dramatically to 8.02%, a record high in the 2011-
In 2022, Vietnam's economy showed strong recovery, as reported by General Director of the General Statistics Office, Nguyen Thi Huong, at a press conference in Hanoi However, the onset of the Ukraine-Russia war in early 2022 disrupted global supply and demand, adversely affecting Vietnam's GDP growth, which reached only 3.72%, falling short of the projected 6-6.5% for the first half of 2023 Despite these challenges, the World Bank forecasts a positive outlook for Vietnam, predicting GDP growth of 5.5% in 2024 and 6% in 2025, indicating a promising development trajectory for the country in the coming years.
GDP growth significantly influences the insurance market by reflecting increased economic activity and income levels As individuals and businesses seek to protect their assets and income, a rise in GDP often leads to greater demand for various insurance products, including life, health, property, and liability insurance This trend may explain the substantial increase in gross written premiums in the insurance market in 2022 compared to previous years (Vivek Agrawal et al., 2023).
Figure 2 Vietnam exchange rate and inflation rate from 2017 to 2025f
The exchange rate between the Vietnamese Dong (VND) and the US Dollar (USD) experienced slight fluctuations before and after the COVID-19 pandemic, largely due to the effective monetary policies implemented by the Vietnamese government According to finance expert Mr Luc, it is anticipated that the USD/VND exchange rate will remain stable through the end of 2023.
The inflation rate remained stable at over 3% in both 2017 and 2018 However, during the COVID-19 pandemic, it dropped to below 3% and even under 2% in 2021, as lockdowns led to a focus on basic needs and increased savings Once COVID-19 was under control, consumer spending shifted back to include non-essential items Concurrently, the onset of the Ukraine-Russia war disrupted global supply chains, particularly affecting energy prices, which had a significant impact on both the manufacturing sector and everyday life.
16 inflation rate in Vietnam is predicted to peak up in 2023 at 5% and then gradually reduce to about 4% in 2025 according to Statista’s calculation
Inflation can significantly hinder the growth of the insurance industry by diminishing the purchasing power of individuals and businesses, leading to reduced demand for insurance products Furthermore, rising inflation can increase claims costs for insurers, particularly in non-life insurance policies where benefits are not fixed at the outset.
Foreign Direct Investment (FDI) and export-import
3.1 Foreign Direct Investment (FDI) in Vietnam:
Figure 3 Foreign direct investment (FDI) inflows in Vietnam from 2018 to 2023f
Table 1 Top 3 FDI investors to Vietnam
Source: Gso.gov.vn and Government news
During the 2017 – 2019 period, Vietnam has always been in top 3 FDI recipients among ASEAN countries, following Singapore and Indonesia From
From 2020 to mid-2023, the growth of registered foreign direct investment (FDI) inflows has slowed compared to previous years, primarily due to the effects of the Covid-19 pandemic This decline has been further exacerbated by global uncertainties stemming from the Ukraine War and rising inflation concerns worldwide.
In recent years, the manufacturing, real estate, and electricity production and distribution sectors have been the top recipients of foreign direct investment (FDI) in Vietnam, accounting for 60.6%, 16.1%, and 8.2% of total capital, respectively Major investors include Singapore, South Korea, Japan, and China The Foreign Investment Agency under the Ministry of Planning and Investment (MPI) projects that Vietnam will attract between US$36-38 billion in FDI in 2023 The State Bank of Vietnam (SBV) highlights that the country has become a successful model for attracting FDI, thanks to its appealing investment environment, stable political landscape, and significant economic growth potential.
Foreign Direct Investment (FDI) can significantly enhance the local insurance market by introducing capital, technology, knowledge, and innovation This influx can lead to increased competitiveness, effectiveness, and a wider variety of insurance products and services, benefiting both consumers and the overall economy However, it is important to consider that FDI may also present certain challenges.
18 difficulties, including political concerns, cultural differences, and regulatory compliance (J Franỗois Outreville, 2021)
3.2 Export-Import activities in Vietnam:
Figure 4 Export-import turnover in Vietnam from 2018 to 2022
The Vietnamese economy significantly relies on foreign trade, in addition to foreign investment Despite the challenging recovery following the COVID-19 pandemic, export-import turnover reached a record high of 732.5 billion USD in the past five years, marking a 9.5% increase compared to 2021.
Foreign Direct Investment (FDI) enterprises significantly boost Vietnam's export-import turnover, particularly in sectors like phones and components, computer electronics, and textiles The United States and European Union countries are the primary export markets for Vietnam, while China, South Korea, and ASEAN nations dominate its import markets.
In 2022, Vietnam surpassed Thailand and Indonesia, ranking second in ASEAN (after Singapore) according to Vietnam Customs news
In the first half of 2023, export and import turnover experienced a significant decline of 15.2% compared to the same period last year, primarily due to weakened demand from overseas markets This downward trend is expected to persist as the year progresses.
According to the World Bank's April 2023 report, Vietnam's export-import turnover is projected to be optimistic, with economic growth expected to rebound to 6.5 percent in 2024 Additionally, domestic inflation is anticipated to decrease from 2024 onwards, bolstered by the accelerating recovery of key export markets, including the U.S., Eurozone, and China.
Export-import activities significantly increase the demand for non-life insurance products, which offer coverage for various risks beyond mortality, such as property and liability Essential types of coverage, including cargo insurance and trade credit insurance, play a crucial role in supporting the growth of the insurance market.
Social
Vietnam's insurance industry is significantly bolstered by its steadily growing and youthful population, which presents a vast market opportunity for various insurance products.
Vietnam's insurance market shows significant growth potential, as current insurance penetration and spending levels remain low compared to both emerging and developed markets The insurance penetration rate in Vietnam stands between 2.3% and 2.8%, significantly lower than the 9.6% average in developed markets and 3.5% in emerging markets Additionally, per capita insurance spending in Vietnam is approximately US$72-75, a stark contrast to US$4,664 in developed markets and US$175 in emerging markets.
The insurance market in Vietnam shows significant potential for growth, with current penetration rates at only 10% of the population, translating to around 10 million life insurance policyholders As GDP and disposable incomes rise, along with increased awareness of health and risk prevention, demand for insurance products is expected to soar The Ministry of Finance anticipates this ratio will increase to 15% by 2025, highlighting the opportunities within the industry The aging population and growing interest in healthcare further contribute to the rapid expansion of both life and non-life insurance sectors Overall, the Vietnam insurance market is poised for robust growth and development in the coming years.
Technology and innovation in Vietnam
In recent years, Vietnam has made notable progress in science, technology, and innovation (STI), yet faces challenges related to institutional capacity, human resources, infrastructure, and funding The COVID-19 pandemic has underscored the critical importance of STI for enhancing corporate resilience, boosting productivity, and promoting social welfare and environmental sustainability.
Vietnamese InsurTechs are revolutionizing the insurance sector by leveraging digital technologies like online platforms, mobile applications, artificial intelligence, blockchain, and cloud computing, as highlighted by International Business System Inc Notable players in this space include INSO, GoBear Vietnam, FiinGroup, and Claim Di The COVID-19 pandemic has significantly altered consumer habits, leading to an increased preference for online solutions in payments, shopping, entertainment, and communication In response, insurance companies such as AIA, Prudential Vietnam, Manulife Vietnam, Chubb Life Vietnam, and Baoviet are investing in digital systems to enhance customer experiences.
In 2020, Vietnam Insurance Finance Online Company Limited (VIFO) launched the country's first online insurance marketplace, enabling customers to effortlessly compare and purchase insurance products from multiple insurers on a single platform.
In 2021, Bao Viet Saigon Company launched a blockchain-based health insurance claim system designed to streamline processes by minimizing paperwork, reducing processing time, and decreasing errors in claim settlements.
In 2021, Fubon Insurance (Vietnam) Co Ltd launched an innovative smart chatbot that leverages natural language processing and machine learning technologies to deliver immediate responses and solutions to customer inquiries and requests.
Vietnam's insurance industry is a promising yet challenging sector, shaped by various macroeconomic factors such as political stability, economic growth, inflation rates, foreign direct investment, and technological advancements The growing population and increasing demand for insurance products present significant opportunities for the industry, including the potential to diversify distribution channels and enhance customer service However, challenges like low insurance awareness, high competition, regulatory hurdles, and cyber risks must be addressed Strategic planning and careful analysis are essential for navigating this dynamic market and capitalizing on its growth potential.
Industry analysis
General overview of the Vietnam insurance industry
The Vietnamese insurance industry has experienced significant transformation over the past few decades, mirroring the country's rapid economic growth Prior to the 1990s, Bao Viet, a state-owned non-life insurance company, held a monopoly on all insurance products and services, with life insurance not being offered until later.
Since the entry of the first foreign-owned life insurer in 1995, Vietnam's insurance industry has experienced significant growth and diversification By 2022, approximately 78 insurance companies were operating in the country, including 31 non-life insurers offering property, casualty, health, and motor insurance; 19 life insurers providing life, annuity, pension, and savings products; 26 insurance brokers facilitating transactions between insurers and customers; and 2 professional reinsurers supporting insurers with reinsurance services This evolution has transformed the Vietnamese insurance landscape from a monopolistic market with limited options to a competitive and dynamic environment rich in diverse offerings.
Figure 6 Structure of Vietnam insurance industry in 2020
Figure 7 Vietnam insurance market growth and GDP growth
Vietnam insurance market growth and GDP growth
GDP growth 6,90% 7,50% 7,40% 2,90% 2,60% 8,02% GWP growth of non-life 12,83% 12,92% 13,62% 6,20% 4,34% 16,80% GWP growth of life insurance 31,15% 30,34% 23,75% 22,42% 21,76% 11,80% GWP growth of Vietnam insurance market 23,42% 23,62% 20,18% 17,02% 16,49% 15,00%
GDP growth GWP growth of non-life
GWP growth of life insurance GWP growth of Vietnam insurance market
The table illustrates Vietnam's GDP growth from 2017 to 2022 alongside the Gross Written Premiums (GWP) growth in the insurance sector, highlighting that the insurance sector consistently surpasses GDP growth Notably, the life insurance market outperformed the non-life segment, except in 2020 The data also indicates that the Covid-19 pandemic led to a decline in both GDP and GWP growth in 2020, followed by a recovery in 2021 and 2022.
25 table shows that Vietnam's insurance market is healthy and has significant growth potential
In 2020, the non-life insurance market in Vietnam experienced higher growth compared to the life insurance market, primarily due to the negative impact of the Covid-19 pandemic on life insurance products, while non-life insurance products benefited from the situation This trend is supported by a report from the World Bank Group.
In 2020, the pandemic significantly reduced household incomes and savings, leading to decreased interest and ability to purchase life insurance products that integrate insurance with savings accounts Additionally, the disruption of distribution channels, including agents and bancassurance, made it more challenging for customers to access these essential financial products.
On the other hand, the non-life insurance market growth was increased by the higher demand for health insurance and property insurance due to the pandemic
(Febis.org, 2022) - The non-life insurance market also gained from the presence of foreign insurers, which improved the credibility and competitiveness of the sector (World Bank Group’s report, 2020)
The Covid-19 pandemic significantly impacted economic activity and consumer confidence in Vietnam in 2020, contributing to a projected decline in both the insurance sector and GDP growth.
In 2020, the Vietnamese economy experienced a growth of only 2.9%, significantly lower than the 7% growth recorded in 2019, as reported by the IMF (Dabla-Norris & Zhang, 2021) The pandemic's lockdown measures and travel restrictions led to a decline in demand, impacting overall economic performance However, the economy began to rebound in 2021 and 2022, indicating a recovery trend following the challenges faced during the pandemic.
In 2021 and 2022, economic recovery is expected to gain momentum due to improved domestic activity and export performance, alongside ongoing immunization efforts The GDP growth reached 8.02% in 2022, with the World Bank forecasting a 6.5% growth for 2023 Additionally, there is a projected increase in demand for hybrid insurance products that combine insurance and savings accounts, such as health, home, and life insurance, contributing to an industry expansion at a CAGR of 8.5% from 2021 to 2026.
Industry performance
The Vietnamese insurance market is experiencing robust growth in demand for healthcare and various insurance products, fueled by demographic and economic shifts With an increasing average life expectancy, there is a greater need for health and retirement insurance to address rising medical costs and a shrinking labor force Additionally, the rise in disposable income allows more individuals to invest in insurance to safeguard their assets, income, and lifestyle Consequently, both the non-life and life insurance sectors have reported substantial increases in premium income in recent years.
The Vietnamese insurance market experienced significant growth prior to the covid-19 pandemic, boasting an annual growth rate exceeding 20%, one of the highest in the region However, the pandemic has disrupted the country's economic and social activities, leading to a decline in the overall growth rate of the insurance market in Vietnam.
The Vietnamese insurance market has experienced a significant decline of approximately 4% year-on-year since the onset of COVID-19, primarily due to reduced consumer spending, diminished business activities, and decreased travel demand, leading to a lower demand for certain insurance products Despite these challenges, there is a positive trend indicated by an increase in the insurance penetration rate, which rose to 3.38% in 2021, surpassing previous years This growth suggests that more individuals in Vietnam are recognizing the importance of insurance in safeguarding themselves and their families against various risks Consequently, the market presents both challenges and opportunities as it adapts to the ongoing impacts of the pandemic.
Figure 8 Vietnam insurance market overview from 2018 to 2021
Source: Vietnam MOF’s report 2016 to 2021
For the non-life insurance sector in Vietnam, it has experienced a remarkable expansion in the past decade, with a significant increase in the total
In 2021, the total premium value of Vietnam's non-life insurance enterprises exceeded 59 trillion VND, nearly tripling since the start of the decade This sector encompasses a variety of insurance products, including property, casualty, health, and motor insurance Bao Viet, the leading state-owned company, historically dominated the market, but competitors like PVI, PTI, Bao Minh, and Pjico have significantly increased their market shares and competitiveness From 2018 to 2021, the non-life insurance industry's growth peaked at 15.6%, surpassing the overall insurance market's average However, this growth rate plummeted to 4.34% in 2021, despite record-high premiums, largely due to the COVID-19 pandemic's impact on demand for travel, aviation, and marine insurance Consequently, the non-life insurance sector in Vietnam has experienced both robust growth and a notable decline in 2021.
29 Figure 9 Vietnam non-life insurance performance from 2016 to 2021
Source: Vietnam MOF’s report from 2016 to 2021
The life insurance sector in Vietnam has experienced rapid growth over the past decade, outpacing the non-life insurance market since 2021 Key players, including Bao Viet and Manulife, dominate the industry, each holding nearly 19 percent of the market share and competing vigorously for the top position The entry of more international companies has intensified competition, highlighting the dynamic nature of Vietnam's life insurance market.
The life insurance industry in Vietnam has experienced a slight decline in growth rates, despite an increase in insurance premiums However, it maintains a higher penetration ratio compared to the non-life insurance sector, largely due to a growing awareness of health among the population.
The COVID-19 pandemic has significantly impacted the insurance market, with a notable increase in awareness among the population In Vietnam, the life insurance penetration ratio stands at 2.15%, indicating the relationship between insurance premiums and the country's GDP This figure reflects the ongoing development and growing recognition of the importance of insurance within the Vietnamese economy.
In 2021, the life insurance sector in Vietnam experienced significant growth, with a notable increase in awareness among the population regarding the importance of life insurance for safeguarding themselves and their families against risks and uncertainties However, this sector also faced a slight decline, contrasting with the non-life insurance growth rate of only 1.23%.
Figure 10 Vietnam life-insurance performance from 2016 to 2021
Source: Vietnam MOF’s report from 2016 to 2021
Claim payments are a crucial indicator of insurance business performance, alongside insurance premium data They represent the monetary compensation that insurance companies provide to customers upon filing claims for their insurance products According to reports from the Vietnam Ministry of Finance (MOF) from 2017 onwards, these payments significantly impact the overall effectiveness and reliability of the insurance sector.
2021 shows that the claim payment in the Vietnam insurance industry has been
The COVID-19 pandemic significantly impacted the Vietnam insurance industry, leading to a decline in claim payments due to lockdown measures and the 5K policy aimed at curbing the virus's spread These restrictions reduced social and economic activities, resulting in fewer insurance claims However, as life in Vietnam returned to normal post-pandemic, claim payments surged from 20,752 billion VND in 2019 to 29,662 billion VND in 2021 This increase reflects a resurgence in daily activities and business operations, prompting more individuals to utilize their insurance products for protection against various risks and uncertainties Overall, the Vietnam insurance industry experienced a decrease in claim payments during the pandemic, followed by a significant recovery afterward.
Figure 11 Claims payment of Vietnam insurance industry from 2017 to 2021
Source: Vietnam MOF’s reports from 2016 to 2021
Insurance companies analysis
PVI Insurance Company
Petro Vietnam Insurance Company (PVI), established in 1996 as part of the Vietnam Oil and Gas Group, specializes in non-life insurance across various sectors, including oil and gas, maritime, property, health, and personal injury PVI offers a comprehensive range of insurance products such as travel, third-party liability, public liability, workmen's compensation, and motor vehicle coverage, along with voluntary medical, building and erection, and electronic equipment insurance The company also provides risk management, claim settlement, inspection, consulting, and loss-adjusting services Additionally, PVI operates a reinsurance subsidiary known as PVIRe.
Since 2022, PVI has emerged as the leading force in Vietnam's non-life insurance market, previously dominated by Bao Viet Insurance This significant achievement marks a historic milestone for PVI Insurance, establishing it as the top industrial insurer in the country in terms of market share, revenue, and operational efficiency Notably, PVI is the first and only insurance company in Vietnam to receive a credit rating upgrade from B++ to A- by the esteemed A.M Best, representing the highest rating among non-life insurance companies in the Vietnamese market (PVI’s annual report, 2022).
Figure 12 Vietnam non-life insurance share market in 2022
Figure 13 Line of business share of PVI in 2022
Based on the line of business of PVI information, the revenue of PVI comes mostly from Property and Casualty insurance product (38.60%), Motor insurance product (17.23%) and Health insurance product (16.13%)
PVI is dedicated to executing its 2021-2025 strategy to emerge as a leading industrial insurance company in Southeast Asia In its 2022 annual financial report, PVI outlined key initiatives for future growth, emphasizing the enhancement of professionalism in the insurance and reinsurance sectors The company plans to invest in fund management while balancing growth and efficiency to ensure business sustainability, effectively addressing risk management and capital preservation needs.
PVI aims to retain its leading position in the non-life insurance market by enhancing services in the oil and gas sector while expanding into other areas for sustainable growth The company will focus on cost control, compensation efficiency, and improving its retail system Additionally, PVI plans to implement effective exchange rate risk management, boost the efficiency of both domestic and international reinsurance, and manage investments prudently to ensure cash flow balance and dividend obligations The restructuring of the parent company and its subsidiaries will prioritize lean operations, transparency, and business efficiency PVI will strengthen management, compliance, and risk management practices to directly impact overall business results The company is committed to developing its brand and promoting business efficiency through improved competitiveness and service quality, while also emphasizing sustainable development and social security Furthermore, PVI will continue to execute a unified human resources strategy to support these goals.
To enhance overall efficiency, it is essential to focus on resource management, training, and development across the system This includes reviewing and arranging personnel, streamlining organizational structures, and reinforcing the responsibilities of unit leaders Additionally, strengthening discipline and promoting systematic development are crucial Emphasizing digital transformation will improve the effectiveness of supporting units in both business and management Continuous upgrades and innovations in infrastructure, along with perfecting management and business software within the entire PVI system, will ensure the comprehensive application of information technology in business operations and management.
PVI is a prominent non-life insurance company in Vietnam, known for its reliability and reputation With a substantial capital of 3,100 billion VND as of 2020, PVI can invest in diverse projects and manage potential risks effectively Its leading position in the non-life insurance market stems from a strategic business plan and competitive product offerings Additionally, PVI boasts a high-quality service system, supported by a professional staff dedicated to providing timely and effective solutions for customers The company also has a robust marketing team that actively promotes its brand and social responsibility through various initiatives, including charity and marketing campaigns These strengths position PVI as a trustworthy and innovative player in Vietnam's non-life insurance sector.
PVI also has some obstacles to overcome and areas where it falls short Its
PVI's limited product variety, primarily focused on Property and Casualty products that constituted 38.4% of its business in 2022, exposes it to market fluctuations and changing customer preferences Additionally, the company's compliance and risk management practices require enhancement, as highlighted in its 2022 annual financial report Ensuring adherence to insurance sector regulations and effective risk management is crucial for PVI's growth Furthermore, the retail segment remains underdeveloped compared to its corporate offerings, presenting another significant area for improvement.
PVI is investing time and resources to develop a robust retail system aimed at reaching a broader consumer base and increasing its market share To maintain its competitive edge and uphold its reputation, PVI is also focusing on enhancing various aspects of its non-life insurance businesses.
PVI has significant opportunities to enhance its market position and earnings in the non-life insurance sector, particularly given the Ministry of Finance's report highlighting a low insurance penetration rate of just 0.92% for non-life insurance and 3.38% overall in 2021 This indicates a vast untapped customer base that PVI can target with its offerings Additionally, the rapidly growing digital market, driven by technological advancements and changing consumer preferences, presents another avenue for growth By leveraging online platforms, PVI can effectively reach customers who prefer digital solutions, particularly in key segments such as e-commerce, financial services, and transportation & food.
The travel and online media sectors are experiencing significant growth, as highlighted by a report from Google, Temasek, and Bain & Company in 2022 Additionally, there is a notable increase in societal awareness regarding the importance of insurance, reflected in the rise of insurance penetration from 1.94% in 2016 to 3.38% in 2021 This trend suggests that consumers are increasingly willing to invest in insurance products to protect their assets and themselves from potential risks.
To thrive in the competitive non-life insurance market, PVI must navigate several critical threats The company's performance is closely tied to the macroeconomic environment, which may face regulatory shifts that could disrupt operations To remain compliant and competitive, PVI must stay vigilant and adapt to market changes and regulatory requirements Additionally, intense competition from both established players and emerging insurtech firms necessitates that PVI differentiate itself by offering innovative, customer-centric products and services to retain market share and customer loyalty Furthermore, the risk of natural disasters, pandemics, and other unforeseen events can lead to increased claims and losses; thus, effective risk management and diversification are essential Lastly, the potential for data breaches and cyberattacks poses a significant threat to PVI's reputation and legal standing, highlighting the need for robust data security measures to mitigate these risks.
Businesses facing ethical or compliance issues with clients or partners risk damaging their brand reputation and may face legal liability Additionally, they must adhere to the ethical standards and conduct guidelines set by their parent company and industry organizations.
Table 2 PVI company's summary balance sheet from 2017 to 2022
Liquid assets and short-term investment 11,490 11,701 13,027 12,548 16,195 17,584 Fixed assets and long term investment 1,616 1,301 1,848 3,086 1,748 2,178 Total assets 13,106 13,002
Liabilities 10,373 10,250 12,097 12,324 14,601 16,166 Owners ‘equity 2,733 2,752 2,778 3,310 3,342 3,596 Total liabilities and owner equities 13,106 13,002 14,875 15,634 17,943 19,762 Source: PVI’s financial reports
Despite the challenges posed by COVID-19, PVI's balance sheet remains robust, with the company's financial performance showing consistent improvement from 2017 to 2022 Total assets rose significantly, reaching 19,762 billion VND in 2022, marking a 50.8% increase since 2017 This growth is largely attributed to PVI's short-term investments and liquid assets, underscoring its strong liquidity and ability to meet short-term obligations.
In 2020, the corporation experienced a decline in liquid assets and short-term investments, dropping from 13,027 billion VND in 2019 to 12,548 billion VND due to the economic impact of COVID-19 The company also reduced its long-term investments and fixed assets, indicating a focus on core business operations Despite these challenges, owners’ equity increased by 31.6% over six years, reflecting retained earnings and enhanced shareholder value However, it is important to note that owner equity constituted less than half of the company's total liabilities over the years, suggesting a higher level of indebtedness as liabilities surpassed equity.
Table 3 PVI company's summary income statement from 2017 to 2022
Unit: Billion VND 2017 2018 2019 2020 2021 2022 Total income 7,082 6,949 7,529 7,762 8,367 10,483 Total expenses 6,632 6,496 6,906 6,953 7,564 9,803
Profit after tax (PAT) 361 375 513 646 636 546 Source: PVI’s financial reports
From 2017 to 2022, PVI demonstrated impressive growth, with total income rising from 7,082 billion VND in 2017 to 10,483 billion VND in 2022, consistently showing no signs of decline Additionally, profit after tax also experienced significant increases during this period.
Bao Minh insurance company
Bao Minh Insurance Corporation is a top non-life insurance provider in Vietnam, holding an 8% market share and ranking fourth in the industry as of 2022 Established in 1994, the company boasts a robust network of 65 member firms nationwide Bao Minh offers a diverse array of insurance products, including motor vehicle, property, health, marine, aviation, liability, and travel insurance, alongside reinsurance and financial investment services With a solid financial foundation, the company has a contributed capital of 1,096.5 billion VND, equity of 2,335 billion VND, and total assets amounting to 7,387 billion VND.
2022 It has a professional and dedicated staff of 1,583 employees and 4,440 agents all over the country
Figure 18 Line of business share of Bao Minh Ins in 2022
Source: Bao Minh’s annual report 2022
Different from PVI, Bao Minh’s revenue is mostly from Health (36.41%), Fire and explosion (24.58%) and Motor vehicle (14.4%)
Despite the challenges posed by COVID-19, Bao Minh Insurance Company remained steadfast in its business strategy, aiming to lead the Vietnamese insurance market with a strong brand and robust financial resources The company continued to expand its efficient network, ensuring timely delivery of insurance services and exceptional customer care Furthermore, Bao Minh invested in enhancing its information systems for financial management and business development to facilitate growth, monitor performance, and improve customer service.
Bao Minh has achieved a professional operational structure and management system that ranks highly both domestically and internationally, supported by an advanced risk management framework designed to minimize losses and maximize profits The company has maintained a B++ rating from AMBEST, reflecting its financial stability and strength on a global scale Furthermore, Bao Minh has set ambitious business objectives for the period from 2021 to 2025, aiming for performance improvements over the previous 2016 to 2020 timeframe.
- Achieving an average sales growth rate from 2021 to 2025 that was equivalent to or higher than the GDP growth rate
- Achieving a minimum 10% annual growth rate in firm efficiency between
- Paying out an average of at least 12% in dividends from 2021 to 2025 - Over the years 2021 to 2025, achieving a profit after tax to equity ratio of at least 10%
- By 2025, it would have increased its charter capital to VND 1,500 billion through equity surplus and other equity sources
Bao Minh stands out as a leading non-life insurance provider in Vietnam, holding an impressive 8% market share in the sector, as highlighted in its 2022 annual report This significant share underscores its dominant position in the industry Furthermore, with equity amounting to 2,335 billion VND and total assets of 7,387 billion VND, Bao Minh showcases a robust capital foundation, reflecting its financial stability and strength.
Since 2007, Bao Minh has engaged in a strategic partnership with a global leader in asset management and insurance, enabling the company to offer enhanced and diverse products and services to clients both in Vietnam and internationally This collaboration has also improved Bao Minh's risk management practices and standards With a dedicated workforce of 4,440 agents and 1,583 employees, Bao Minh is well-positioned for sustainable growth and success in the competitive insurance market.
Bao Minh faces several weaknesses that could hinder its performance and growth, particularly in its operational management, which requires enhancements to adapt to changing circumstances To boost profitability, the company must focus on increasing revenue while simultaneously reducing costs Additionally, improving expenditure management is crucial for maximizing net income.
Bao Minh is poised for expansion and success through its strategic partnership with AXA, which opens doors to new markets and a broader customer base both domestically and internationally This collaboration enables Bao Minh to enhance its clientele and diversify its offerings Additionally, the increasing demand for insurance services in Vietnam, particularly in health, vehicle, and property sectors, presents a significant opportunity By delivering high-quality insurance products at competitive prices, Bao Minh can effectively address this growing need Furthermore, embracing digital transformation and innovative strategies will enhance operational efficiency, improve customer service, and strengthen risk management.
Bao Minh has the opportunity to expand its customer base and enhance operational efficiency by tapping into Vietnam's vast market potential, where non-life insurance penetration remains low This presents a significant opportunity to target a large segment of underinsured or uninsured clients Additionally, the rapid growth of the digital economy, driven by technological advancements and changing consumer preferences, opens new avenues for Bao Minh in sectors such as e-commerce, financial services, food and transportation, online travel, and online media As consumer awareness of the importance of insurance for protection and security increases, Bao Minh stands to benefit from this heightened understanding and demand for insurance solutions.
Bao Minh faces significant challenges that could hinder its growth and effectiveness, primarily due to the insurance market's dependence on the macroeconomy and regulatory changes The company must navigate these complexities while remaining compliant with laws and regulations, adapting to shifts in the market environment Additionally, intense competition from local and foreign players, including emerging insurtech firms accelerated by the COVID-19 pandemic, poses a threat To maintain its competitive edge, Bao Minh should focus on delivering superior products and services to distinguish itself in the marketplace Moreover, unforeseen events such as natural disasters and pandemics could further impact the company's performance.
Bao Minh must effectively manage business risks and prepare for unforeseen circumstances to mitigate potential claims or losses With the rise of IT advancements, the risk of data breaches or hacks that could damage the company's reputation and lead to legal issues is significant Therefore, it is essential for Bao Minh to enhance IT security measures to protect company data and systems from various threats.
Ethical and compliance issues, as well as disagreements with clients or partners, can jeopardize a business's reputation and expose it to legal liabilities.
Table 6 Bao Minh insurance company's summary balance sheet from 2017 to
BAO MINH INSURANCE COMPANY SUMMARY BALANCE SHEET Unit: Billion VND 2017 2018 2019 2020 2021 2022 Assets
Liquid assets and short-term investment 4,453 4,642 4,697 5,445 6,506 6,287 Fixed assets and long-term investment 987 836 983 1107 881 750 Total assets 5,440 5,478 5,680 6,552 7,387 7,037 Liabilities and owner equities
Liabilities 3,312 3,236 3,412 4,249 5,052 4,617 owners’ equity 2,128 2,242 2,268 2,303 2,335 2,420 Total liabilities and owner equities 5,440 5,478 5,680 6,552 7,387 7,037 Source: Bao Minh’s financial reports
Bao Minh insurance company's summary balance sheet for the years 2017 through 2022 demonstrates the improvement in the company's financial performance and position over time The company's total assets increased
Between 2017 and 2022, the company's financial performance demonstrated significant growth, with total assets reaching 7,037 billion VND in 2022, marking a 29.3% increase since 2017 This growth is largely attributed to the company's robust short-term investments and liquid assets, reflecting its strong liquidity and ability to fulfill short-term obligations Additionally, owners' equity rose by 14% over the six-year period, indicating effective earnings retention and an enhancement in shareholder wealth While there is minimal deviation between total liabilities and owners' equity, liabilities surpass owners' equity, resulting in an average debt-to-equity ratio that highlights the company's financial leverage.
1.5 each year Or in another word, to finance its assets, the corporation is using more debt than equity It might pay interest and principal on its loans and might find it challenging to do so if its income decreases, this could increase its financial risk
Table 7 Bao Minh insurance company's summary income statement
Unit: Billion VND 2017 2018 2019 2020 2021 2022 Total income 3,911 3,942 4,324 4,720 4,847 5,655 Total expenses 3,713 3,741 4,103 4,487 4,541 5,312
Profit before tax (PBT) 198 201 221 233 306 343 Profit after tax (PAT) 163
162 181 195 255 291 Source: Bao Minh’s financial reports
From 2017 to 2022, Bao Minh experienced steady growth, with total income increasing from 3,911 billion VND to 5,655 billion VND, and profit after tax rising from 163 billion VND to 291 billion VND Notably, the COVID-19 pandemic did not significantly affect the company's revenue and profitability during 2020 and 2021, even amid lockdowns.
During the 50-day shutdown, plant operations were significantly reduced, leading to increased home confinement for individuals This period is reflected in the gradual rise in total income and profit after tax (PAT) before and after the COVID-19 pandemic.
Table 8 Bao Minh insurance company's summary cash management from 2017 to
Dai-ichi life insurance company
Dai-ichi Life Group, a leading life insurance provider in Japan, has established a successful international presence, notably through its Vietnam Daichi Insurance Company, which has been operating in Vietnam since 2007 Over the past 16 years, the company has achieved remarkable growth in the Vietnamese market, contributing significantly to the country's social and economic development Dai-ichi Life offers a range of insurance products, including protection, savings, investment, retirement, education, and health insurance.
The corporation has experienced significant growth in the life insurance sector, increasing its total premium from 6,000 billion dong in 2017 to approximately 22,000 billion dong in 2022, marking a 17% rise from 2021 to 2022 This growth highlights the company's strong market position and high customer retention Furthermore, the business has expanded its distribution network, employing 2,500 people by 2022, up from 1,300 employees and 170 offices in 2017 Additionally, the number of policies issued has more than doubled, rising from 1.5 million in 2017 to over 3 million by 2022 The company also offers convenient online services for premium payments, policy details, and customer assistance.
In 2022, the organization experienced significant growth in its customer base while reinforcing its commitment to corporate social responsibility (CSR) through various initiatives focused on environmental support, healthcare, education, and disaster relief Since its inception, the corporation has donated over 50 billion dong to numerous charitable efforts, highlighting its dedication to enhancing the prosperity and well-being of the Vietnamese people.
Vietnam Daichi Insurance Company, a prominent subsidiary of the Dai-ichi Life Group, has significantly contributed to Vietnam's social and economic development through its remarkable growth and performance in the local market The company exemplifies quality and innovation, setting a benchmark for Dai-ichi Life Group's international life insurance operations.
Figure 19 Top 5 largest life insurance companies in Vietnam 2022
Source: Vietnamcredit – Top 5 largest life insurance companies in Vietnam in 2022
From 2017 to 2022, Vietnam Daichi Life's business plan underscores its vision and leadership in the life insurance sector, anchored by a "Customer First" philosophy that prioritizes customer experience through digital transformation The plan focuses on expanding human resources, diversifying product offerings, and strengthening financial performance This strategic approach has led to remarkable growth in the Vietnamese market, contributing to the country's social and economic development The company's total premium surged from 6,000 billion dong in 2017 to approximately 22,000 billion dong in 2022, marking a 17% increase from 2021 to 2022 Furthermore, the customer base has expanded from 1.5 million policies in 2017 to over 3 million policies by 2022.
By 2022, the corporation increased its investment capital to over 80,000 billion dong, up from 1,500 billion dong in 2017 Furthermore, the company's asset value surged from 2 billion dong in 2017 to more than 160 billion dong in 2022 (APEA.asia, 2023).
Vietnam Daichi Life demonstrates a strong commitment to corporate social responsibility through various initiatives focused on environmental support, healthcare, education, and disaster relief Since its inception, the company has donated over 50 billion dong to a wide range of charitable causes Overall, the business strategy of Vietnam Daichi Life from 2017 reflects its dedication to making a positive impact on society.
In 2022, a life insurance company demonstrated significant market growth and performance by focusing on customer priorities, striving for excellence, and embracing innovation, ultimately contributing to the nation's social and economic development.
Vietnam Dai-ichi Life Insurance Company, a subsidiary of the reputable Dai-ichi Life Holdings, Inc., has demonstrated remarkable growth in the Vietnamese market from 2017 to 2022, significantly increasing its total premium, client base, investment capital, and asset value The company offers a comprehensive range of products that cater to diverse customer needs, including protection, savings, investments, retirement, education, and health insurance With a workforce of 2,500 employees and over 300 offices nationwide, Vietnam Dai-ichi Life is well-positioned to meet the evolving demands of its clients.
57 high level of client satisfaction and loyalty in addition to having a well-known and recognized brand
Dai-ichi Life Vietnam faces significant internal vulnerabilities, primarily its heavy reliance on its parent company for financial and operational support, which limits its independence and market flexibility The company struggles with a high spending ratio and low return on equity, resulting in lower profitability and efficiency compared to its competitors Additionally, it has a limited market share and penetration in key regions, particularly in northern and central Vietnam, where competition with other life insurance firms is intense Furthermore, Dai-ichi Life Vietnam experiences challenges in attracting, training, and retaining skilled employees, leading to a high employee turnover and attrition rate, as noted in its 2018 annual report.
Leveraging the expertise and resources of its parent corporation, the business can enhance its product development and innovation capabilities By harnessing advanced technology and specialized knowledge, the company can create tailored products that meet the evolving demands and preferences of the market.
The Vietnamese life insurance market is poised for growth, fueled by increasing income levels, urbanization, and heightened public awareness of financial security As demand for life insurance products and services rises, companies stand to benefit significantly from these emerging trends.
58 growth rate of 15.4% between 2020 and 2025, offers opportunities for the organization to capitalize
In 2021, life insurance penetration stood at 2.47%, while the overall market penetration was 3.38%, according to the Ministry of Finance This presents Dai-ichi company with the opportunity to target a large client base that is either uninsured or underinsured Additionally, the company can capitalize on the expanding potential of the digital economy, driven by technological advancements and evolving consumer preferences.
The company risks losing customers and market share to competitors offering more attractive products or lower prices Established life insurance providers in Vietnam, such as Prudential, Manulife, Bao Viet, and AIA, pose significant competition Additionally, both international and domestic newcomers may introduce innovative or disruptive products and services at competitive rates, further challenging the firm's position in the market.
To maintain a competitive edge, companies must adapt to evolving customer demands and technological advancements Continuous innovation and enhancement of products and services are essential, focusing on offering personalized, flexible, and practical solutions Additionally, improving operational efficiency is crucial for meeting these changing expectations.
59 customer experience, and data security, the organization may also need to incorporate and integrate new technologies, such as artificial intelligence, big data, blockchain, and cloud computing
Concludes and suggests implications and limitations
Conclusion and recommendation
This dissertation investigates the effects of COVID-19 on Vietnam's insurance market by analyzing macroeconomic factors, industry dynamics, and company-level influences before and after the pandemic Utilizing a variety of research methods, including data collection from official statistics and reports, the study employs analytical tools such as descriptive statistics, trend analysis, ratio analysis, and SWOT analysis Key findings indicate significant changes in the insurance market, including a decline in overall premium growth, a shift in product mix, increased claims and expenses, and varied company performance and strategies The research also highlights enduring trends, such as the dominance of non-life insurance, market share concentration among a few large firms, and low insurance penetration and density in Vietnam.
Limitations
The research identified several limitations, including issues related to data availability, quality, reliability, and the assumptions and biases that may have influenced the findings It also highlighted the need for further investigation into the effects of COVID-19 on customer behavior, demand, and satisfaction, as well as the innovation and adaptation of insurance products and services and the regulation of the insurance industry Furthermore, the study underscored its contributions to the field, enhancing the existing literature on Vietnam's insurance market, particularly in light of the pandemic.
19 The research also discussed how it can benefit or inform the stakeholders of the insurance industry, such as policy makers, regulators, managers, investors, customers, etc
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