Vietnam’s Revised Insurance coverage Regulation Opens Market to Better FDI

Vietnam’s revised insurance coverage legislation has come into pressure, releasing up the sector for overseas companies eager to faucet into the demand for insurance coverage companies within the Southeast Asian nation. We focus on the scope of Vietnam’s insurance coverage market.

On January 1, 2023, a revised model of Vietnam’s Regulation on Insurance coverage Companies got here into pressure. This new legislation presents a lot of alternatives for overseas companies that function inside the insurance coverage sector.

Revisions to the legislation, most significantly, will enable for overseas companies to contribute the total chartered capital of an insurance coverage enterprise in Vietnam. Because of this an area accomplice is not going to be required.

This could open the market additional for overseas insurance coverage companies that need to begin doing enterprise in Vietnam.

Vietnam’s insurance coverage market in numbers

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In 2021, Vietnam’s insurance coverage business reached VND 255,876 billion (US$10.9 billion), together with VND 218,357 billion (US$9.3 billion) in insurance coverage premiums whereas the remaining VND 37,519 billion (US$1.6 billion) got here from funding earnings, in line with the Ministry of Finance (MoF).

Insurance coverage Premiums 2020 vs 2021 (VND Billion)

Supply: The Annual Report of the Vietnam Insurance coverage Market 2021

Vietnam’s insurance coverage market is predicted to develop at a compound annual development fee (CAGR) of 8.5 %. That is anticipated to translate from VND 60.15 trillion (US$2.6 billion) in 2021 to VND 90.24 trillion (US$3.5 billion) in 2026, by way of gross written premiums (GWP), in line with knowledge analysts GlobalData.

International enterprises in Vietnam’s insurance coverage market

International insurance coverage corporations have 18 consultant workplaces in Vietnam. This contains 5 in Ho Chi Minh Metropolis with the remaining 13 in Hanoi.

Most of those enterprises are from South Korea, with a complete of six consultant workplaces within the nation. This was adopted by Japan with 4 workplaces, Chinese language Taiwan with three workplaces, after which one workplace every for corporations from Germany, Hong Kong, France, Russia, and the UK.

Of those, 9 insurance coverage corporations supply merchandise aside from life insurance coverage, six supply life insurance coverage, and three are insurance coverage brokers.

International insurance coverage corporations in Vietnam

Supply: The Annual Report of the Vietnam Insurance coverage Market 2021

(*) Beforehand referred to as LIG insurance coverage Co., Ltd.

(**) Nipponkoa Insurance coverage Co., Ltd beforehand referred to as Sompo Japan Insurance coverage Inc.

Key gamers in Vietnam’s insurance coverage market

Vietnam’s insurance coverage market (excluding life insurance coverage) is dominated by 5 key gamers, which accounted for 53.27 % of non-life insurance coverage premiums in 2021. This was to the worth of VND 59,135 billion (US$2.5 billion). Notably, this was a 4.34 % improve over 2020.

These 5 key gamers are:

• Bao Viet was established in 1965 and is Vietnam’s greatest insurance coverage supplier. It additionally offers a variety of different monetary companies.
• PetroVietnam Insurance coverage (PVI) is a subsidiary of the Vietnam Oil and Fuel Group. Although it offers private insurance coverage, its focus is on insurance coverage options for companies in Vietnam.
• Publish and Telecommunications Insurance coverage Company (PTI) was initially part of the Vietnam Publish Company (VPC); nevertheless, as of December 2021 VPC had divested all of its shares within the firm. Its two main stakeholders at the moment are VNDirect and DB Insurance coverage from S.Korea.
• Bao Minh Insurance coverage was based in 1994. In 2006 it was listed on the Hanoi Inventory Change and in 2008 on the Ho Chi Minh Metropolis inventory trade. As of December 2021, it was Vietnam’s fourth greatest insurer.
• Navy Insurance coverage Firm (MIC) was established in 2007 and is Vietnam’s fifth greatest insurer. It started as a subsidiary of the Central Navy Fee however is now publicly traded.

There are an additional 27 different insurers working within the non-life insurance coverage sector that cowl the remaining 46.72 % of insurance coverage premiums.

Insurance coverage market regulation in Vietnam

The important thing regulatory doc governing Vietnam’s insurance coverage business is the aforementioned Regulation on Insurance coverage Companies.

The legislation got here into pressure in 2000 and was subsequently up to date in 2010 and 2019 with the newest model coming into pressure at the start of 2022.

There are additionally a lot of Circulars, Legal guidelines, and Decrees governing numerous sections of Vietnam’s insurance coverage market.

Getting into Vietnam’s insurance coverage market

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With the newest replace of the Regulation on Insurance coverage Companies, overseas enterprises are permitted full possession of their operations in Vietnam which ought to give them better management.

Retaining this in thoughts, with a penetration fee of simply 3.38 %, the Vietnamese insurance coverage market has ample room to develop. This coupled with an more and more rich shopper class—20 million Vietnamese are anticipated to be spending greater than US$30 a day by 2030 up from 4 million in 2020—might present insurance coverage corporations with a novel alternative to enter the market because it enters a doubtlessly very worthwhile upswing.

For extra info on coming into Vietnam’s insurance coverage market contact the enterprise advisory unit at Dezan Shira and Associates.