1.Industry overview 2.New regulations on Industry development 3.External Influences on the Insurance Industry 4.Life Insurance 5.Non-life Insurance 6.Bancassurance 7.Re-insurance and Insurance Brokers 8.Industry Forecast 9.Market structure and top companies
Overview Vietnam has 66 insurance compa- Life nies, of which 30 are non-life insurers, 18 life insurers, 2 re-insurers, 16 100 insurance brokers and 21 80 representatives of foreign insurers. 2019 marked the sixth year in a row 60 that the Vietnamese insurance market 40 has achieved a premium growth rate 20 of over 20%. Total assets are VND 0 454 trillion, increasing by 15.03%. Household incomes are growing in Non accordance with people’s awareness of the benefits of insurance. Leading 100 insurers have access to capital and 80 are introducing innovative and 60 appropriate products through multiple 40 distribution channels. Whilst the 20 regulator works to improve 0 transparency and standards. Premiums are forecasted to The demonstrate double-digit growth. 1
e insurance 11 12 13 14 15 16 17 18 19 n-Life insurance 11 12 13 14 15 16 17 18 19 10-year development of life and non-life insurance industry (2011 – 2020) Source: Stockbiz, BMI , complied by VietnamCredit
Double-digit growth demonstrates developing potential for both life and non-life segments. Good diversification of the non-life segment product lines. A fragmented marketplace with a number of smaller domestic players indicates a potential future of mergers and acquisitions. Massive growth in the agency network is likely to push up the premium revenue STRENGTHS OPPORTUNITIES Rising income levels and the sizeable population form a promising market The trend toward private health facilities should lead to demand for health insurance. Pricing discipline and claims control are improving though the Government’s intervention. Restrictions on foreign companies and overseas investment are gradually being lifted. 30% 25% 20% 15% 10% 5% 0% Hai Phong Quang Ninh Thanh Hoa Hai Duong Hanoi
Many domestic non-life companies lack ready access to new capital Many Vietnamese households still do not have sufficient income to purchase life insurance The domestic economy remains undiversified, limiting the growth potential of lines such as credit or financial guarantee and general liability insurance WEAKNESSES THREATS The current growth rate is likely to slow. High-inflation may affect buyers’ perspective on the value of insurance products. Volatility and a lack of development in Vietnam’s capital and bond markets complicate investment strategies Natural disasters are major threat for this tropical country The expansion of the government’s mandatory health insurance program Ho Chi Minh Dong Nai Vung Tau Binh Duong Can Tho 2
New regula Industry de In 2019, Vietnam’s Government actively relea strengthening legal aspects for the developme Re-determine risk evaluation calculation, reserves and interest. Insurance auxiliary services Circular No. and cross-border insurers dated 0 Amendment and Circular 50 about and Insuran Decree No.80/2019/NĐ-CP 20 dated 01/11/2019 Amendment supplementing regarding Decree 73/2016/NĐ-CP on Insurance Business law, regarding Insurance Business Law and insurance auxiliary services. Circular No.65/2019/TT-BTC dated 16/09/2019 Regulations on training content, examination, issuance and certification Decision No.2 dated 26 Regarding the of ag insuran 3
ations on evelopment ased decisions and amendments on Insurance Law, ent of the industry. .1/2019/TT-BTC Define specific goals and 02/01/2019 methods for restructuring d Supplementing for the insurance market by 0/2017/TT-BTC 2020 and until 2025 Insurance Decision No.242/QĐ-TTg nce Business law dated 28/02/2019 019 Restructuring Securities and Insurance market by 2020 and vision to 2025 22/2019/QĐ-TTg Law No.42/2019/QH14 6/06/2019 dated 14/06/2019 e implementation Amendment law number griculture 24/2000/QH10 nce policies Source: MOF, MOI
The necessity in amending the Insurance Busin many free trade agreements, most recently are CPTP opening market with insurance auxiliary services. Insurance auxiliary services include: Insurance consultancy activities Evaluation of insurance risks Insurance calculations Assessment of insurance losses Support insurance compensation settlement This shows that Insurance auxiliary services have a m market development. On November 1st 2019, Vietnam’s Government r and Supplementing a number of articles of Law on I for the development of insurance auxiliary services.
ness Law relates directly to Vietnam’s participation in PP and EVFTA, in which Vietnam signed to commit to major impact on the quality of insurance services and released Decree No. 80/2019/NĐ-CP on Amending Insurance Business. This action is an official opening 4
External Inf The Insuran The OECD report that Vietnam Fi is considered to be one of the 10 countries most vulnerable to the 3500 impact of natural disasters and 3000 climate change. According to the 2500 World Bank, 70% off the country’s 2000 population are directly affected by 1500 typhoons, floods, droughts, storm 1000 surges, saltwater intrusion, landslides, forest fires and 500 occasional earthquakes. Disaster 0 risk iscommonly regarded by insurers as an expanded risk in Tr property insurance applications, human insurance or agricultural 25000 insurance (crops and livestock). Daily accidents in Vietnam tend to 20000 decrease in recent years, however, 15000 the number of deaths remain 10000 unchanged. Day-by-day, people’s awareness of the necessity for 5000 financial back-up in unexpected 0 situations is rising, giving room for insurers to diversify their product lines to meet market demand. 5
fluences on nce Industry ire and explosion risk 1600 1400 1200 1000 800 600 400 200 0 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Total number Injured Fatality Total loss VND billion raffic accidents in Vietnam through years 25000 20000 15000 10000 5000 0 2015 2016 2017 2018 2019 2020 Total number Fatality number Injured nember
Vietnam natural disasters’ consequenc 70000 60000 50000 40000 30000 20000 1000 0 2013 2014 2015 2012 Fatality number Total number
ce through years 1400 1200 1000 800 600 400 200 0 2016 2017 2018 2019 Injured nember Source: GSO, WHO 6
From December 2019, V Covid-19 – a virus which insurers in Vietnam annou compensation for unexpe life insurance sector incre 2003 – SARS 14 2014 – EBOLA a 2015 – MERS. Worldwide epidemic 50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 MERS-Cov 7
Vietnam and the world faced the explosion of h is considered as an epidemic by WHO. Many unced payouts Covid-19 treatment and ected situations. Record shows that Vietnam’s eased by 53% in: 4.9% and 29% c record 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% SARS Covid-19 Ebola
Vietnam ranked 78th out of 172 countries sur 100.00, the same rate as Finland, Somalia and Turk 68,000 in 2000 to 126,000 in 2010 and is expecte Liver cancer causes half of the deaths. For males, liv for the highest number of new cases, whilst in female represent the highest numbers. On average, each day Vietnam sees 315 deaths fro treatment at a later stage so the treatment is more d should be a chance for life and health insurers to wi NUMBER OF DEATH BY CANCER S Other cancers Prostate Cervix uteri Thyroid Colon Leukaemia Nasopharynx Rectum Breast Stomach Lung Liver 0 5000 10.000
Worldwide epidemic record Liver Lung Stomach Breast Colorectum Other cancers rveyed for cancer, with a mortality rate of 110 / kmenistan. The number of new cases increased from ed to surpass 190,000 by 2020. ver, lung and stomach cancer respectively account es, breast, colorectal and lung cancers, in turn, om cancer. Most patients come for examination and difficult and expensive. These numbers and facts iden their product lines to meet market demands. SITES 20.000 30.000 40.000 50.000 Source: Globocan2018, WHO 8
Life Insuran Gross life insurance premium 20000 35 18000 30 16000 25 14000 12000 20 10000 15 8000 6000 10 4000 5 2000 00 2016 2017 2018 2019 2020 2021F 2020F 2023F Gross life premiums written VND Gross life premiums written VND, % According to the latest update from Vietnam In insurance premium reached VND 107.79 trillion (~ assets of the segment increased 17.23%, to VND 3 and reached VND279,976 billion, rising 18% com The growth in life insurance premiums in Vietnam - A young population - Urbanization and the growth of the middle - The absence of a comprehensive social se - High saving rates compared to the numbe - Diversified products in a competitive mark 9
nce Market dominator’s premium Bao Viet Life Prudential Manulife Dai-ichi AIA Chubb Life Others nsurance Supervisory Authority (ISA), in 2019, life ~ USD 4.66 billion), up 23% year-on-year. Total 364,932 billion. Total reserves followed the uptrend mpared to the year 2018. is supported by some structural factors, including: e class ecurity system er of high-income households ket.
BVL Premium income of life insurers 2016 PVA Manulife VN25.000 AIA VN Chubb Life VN20.000 Prévoir VN Dai-ichi Life VN15.000 Cathay Life VN FWD VN10.000 5.000 0 The Vietnam Ministry of Finance aims to raise from the current level of nearly 8.5% to 11% in 2 There are 18 life insurance companies with more general insurers. Despite the significant growth ra recorded losses. Reasons to take into account, inc - Government bond interest rates fell in all - Level of minimum reserves increased acc
2017 2018 Growth rate in 2018 200% 150% 100% 50% 0% -50% -100% Hanwha Life VN VCLI Fubon Life VN Generali Life VN Vietin Aviva Sun Life VN PHL BIDV VN MB Ageas Life Phu Hung Life e the total population who possess life insurance 2020, and rising to 15% in 2025. than one thousand representative offices and ate of premium, half of the insurers on the market clude: l terms at the end of 2019. cording to changes in Insurance Law. Source: complied by VietnamCredit 10
Profit before tax of life insurers 2016 1.700 1.400 1.100 800 500 200 -100 -400 -700 -1.000 -1.300 BVL PVA Manulife VN AIA VN Chubb Life VN Prévoir VN Dai-ichi Life VN Cathay Life VN FWD VN 11
Hanwha Life VN 2017 VCLI 2018 Fubon Life VN Generali Life VN Source: complied by VietnamCredit Vietin Aviva Sun Life VN PHL BIDV VN MB Ageas Life Phu Hung Life
Non-Life I Gross non-life insurance premium 9000 18 8000 16 7000 14 6000 12 5000 10 4000 8 3000 6 2000 4 1000 2 00 2016 2017 2018 2019 2020 2021 2022f 2023f Gross life premiums written VND Gross life premiums written VND, % Alongside life insurance, the non-life insuranc of 11.6% in premiums revenue reaching VND 52, 2019. Total assets of non-life insurers went up 7.8 The non-life insurance market is smaller than life – Bao Viet and PVI. The total number of non-life i the field highly competitive.
Insurance Premium dominators Bao Viet Life PVI BaoMinh PTI PJICO VASS Others ce segment also showed an increasing growth rate ,380 billion (~ USD 2.26 million) at the end of 89% to VND 89,447 billion. insurance, and mainly controlled by domestic firms insurers is nearly double that of life insurers, making Source: complied by VietnamCredit 12
BH Bảo ViệtPremium income of non-life insurers Bảo Minh BH PJICO12.000 Bảo Long BH PVI10.000 BVTM UIC8.000 PTI 6.000 Groupama VN VBI4.000 Samsung Vina2.000 VASS BIC0 AAA Health and personal accident insurance along w AIG Việt Namareas of premium revenues. Rising income levels domestic passenger car demand with an expecta As basic car insurance is compulsory in Vietnam, insurance in future years. The four main driving forces for the growth of thi - Increasing car sales revenue - Positive economy growth rate - The growing middle-class - Increasing infrastructure investment. 13
2017 2018 Growth rate in 2018 400% 350% 300% 250% 200% 150% 100% 50% 0% -50% QBE Việt Nam ABIC GIC PAC Liberty Chubb Việt Nam MIC VNI BSH BHV MSIG Việt Nam Fubon Vietnam XTI Cathay Việt Nam SGI Hà Nội with motor vehicle insurance comprise the largest s plus the ASEAN FTA in 2018 are likely to promote ation of 20% growth in 2020 vehicle sales revenue. , this should reflect an expansion of non-life is market are:
Non-life insurance premiums by produc lines (2016-2023) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2016 2017 2018 2019
Other insurance, Million VND Credit/ financial guarantee insurance, Million VND General liability insurance, Million VND Health and personal accident insurance, Million VND ct Transport insurance, Million VND Property insurance, Million VND Motor vehicle insurance, Million VND 2020 2021 2022f 2023f Source: complied by VietnamCredit 14
Bancassura Vietnam has one of the fastest-growing m growing at 10% CAGR between 2016 an Group, the middle class earning USD 714 million people, about a third of the popu Changes in the awareness of middle-inc increasing importance is placed on prot growth of Bancassurance – the selling of banking institutions. This is a key opportunity for financial instit Vietnam is underdeveloped in comparis customer needs, increasing demand for for medical protection and long-term sa offer ample opportunities for players to p range of market-leading life insurance so delivering this product is, and will continu In 2019, insurance premiums revenue thr total revenue, doubling compared to 20 Bancassurance trend after a lot of major business deal between FDW and Vietcom signified a major trend for Vietnam’s Ban catch up with the rate of 70% in develop consider this channel a strategic develo and diversification in satisfying customer 15
ance middle-income groups in the region, nd 2021. According to Boston Consulting 4 a month in Vietnam will double to 33 ulation, between 2014 and 2020. come class individuals, amongst whom tection and insurance, will promote the f insurance products and services by tutions, as the Bancassurance market in son with other countries. Expanding r life coverage and the growing need avings for education and retirement all provide a diverse and sophisticated olutions. The partnership with banks in ue to be a significant trend. rough Bancassurance took over 30% of 017. 2019 saw an increase in the r deals had been signed. The famous mbank for an estimated USD 400 million ncassurance segment , helping it to ped countries. More and more banks opment for both a stable income stream r demand.
Share of Bancassurance in life insura 50% 40% 30% 20% 10% 0% Malaysia Indonesia Singapore Philippines Thailand Vietnam’s Bancassurance growth rate 2014 2016 2017 2018 Net profit from bancassurance of Vietn TPBANK VIB VPBANK M
ance market Vietnam e 2019 nam’s banks 2019 MBBANK Net profit Net profit from Bancassurance Source: complied by VietnamCredit 16
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Source: complied by VietnamCredit 18
Re-insuran Insurance B The Insurance Broker market was still highly concentrated on the four foreign invested companies which account for 95.7% of total premiums arranged by brokerages. These were Marsh, Aon, Gras Savoye Willis and Jardine Lloyd Thompson. Other brokers only had a small revenue of 4.93% of total premiums. Premium revenue from Insurance Brokers in 2018 Sabrian (0.14%) Sao Viet (0.29%) Nam A (1.45%) Ginet (0.10%) Pacific Ocean (0.14%) Cimeico (1.76%) Viet Quoc (0.01%) A Dong (0.16%) TTIBV (1.03%) Marsh (48.37%) Aon (26.02%) Gras Savoye(15.12%) JLT (5.3%) 19
Health nce and Agricutures Brokerages Business Interruption Credit and Financial risk Insurance premium through brokers General Liability by product lines Hull and P&I Fire and explosion 7.000 Automobile s 6.000 Aviation Cargo 5.000 4.000 Property and casuality 3.000 Life Insurance 2.000 1.000 0
PVIRE 800 2.200 2.000 1.800 600 1.600 1.400 1.200 400 1.000 800 600 200 400 200 0 0 2017 2018 2019 2020 Two players in Vietnam’s re-insurance mark Both firms saw significant growth in premiu are expected to remain the same. PVIRe: From being a 100% state-owned en state capital, then sold shares to strategic has only 35% state ownership in PVI, beside including: HDI Global Group: 42.91% and O 11.58 %. Vinare takes the larger share amount since dominant player in Vietnam and the ASEA Individual Nu agents a Life insurance 474.882 Non-life insurance 98.126 573.008 Total
VINARE Revenue Profit 2017 2018 2019 ket are PVIRe and Vinare ums revenue, however, the future profit nterprise, PVI has been equitized to reduce foreign shareholders. At the moment, PVN es 2 strategic foreign shareholders Oman Government Investment Fund (OIF): e the firm’s strategic vision is to be the AN region. Agency Organization Total umber of Number of 760.723 agencies members 138.348 899.071 502 285.841 2.198 40.222 2.700 326.063 20
Industry for Real GDP growth rate (%) 8 7 6 5 4 3 2 1 0 2013 2014 2015 2016 2017 2018 2019 2020F 2021F Compared globally, Vietnam’s insurance ind with developing economic trends, this mark foreseeable growth potential. Household incomes are rising, leading afford insurance. Market expansion, with increasing of n numerous bancassurance partnership Multiple distribution channels. The ISA continues to work on revising t tency with various Free Trade Agreem 21
recast Average monthly income per capital (million VND) 4.5 2012 2014 2016 2018 2019 4 3.5 3 2.5 2 1.5 1 0.5 0 2010 dustry still appears to be relatively small. However, ket has some advantages which demonstrate g to an increasing number of people who can new investments from foreign giants under ps. the Law on Insurance Business to improve consis ments, generating room for industry growth.
Average written premium on GDP 0.09 0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0 0 2018 2020F 2025F Cambodia 24 Indonesia Vietnam Philipines Malaysia Thailand Japan Singapore United Kingdom 0
Vietnam Thailand Malaysia Singapore 68 10 12 Source: GSO, ISA, PwC 22
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