HANOI: Vietnamese insurers have been offered great opportunities to expand their market share in the regional market thanks to the formation of the ASEAN Economic Community (AEC). With total gross domestic product of US$2.6 trillion, ASEAN will represent a large market for insurance products to a population of 625 million.
According to Milliman – a US-based multinational consultancy provider, life insurance penetration rates in ASEAN markets are still at very low levels relative to those in more developed economies.
In 2013, Singapore is the most developed country in the ASEAN bloc and only reached premium revenue of 4.8 per cent of its GDP, which was much lower than that of Hong Kong at 12.1 per cent and 8 per cent in Japan. Most of the ASEAN countries have a ratio of less than 2 per cent and this will be a great opportunity for life insurers to expand their market share.
Nguyen Viet Loi, director of Institute of Strategic and Financial Policies (Ministry of Finance), said the development of sea transport, road and air routes within ASEAN will be a pre-requisite for the development of new insurance products.
Besides, Vietnamese insurers will have more opportunities for investment abroad, while the local insurance industry will also enjoy significant benefits from the labour force thus helping to address the problem of senior-level personnel in the insurance industry.
Loi said the removal of barriers and differences among AEC member nations will create a fair market for Vietnamese and foreign insurance companies. Currently, foreign investors are now allowed to own a maximum of 49 percent of stake at local insurance firms, Loi said, highlighting the importance of foreign investors’ participation in bettering the administration of Vietnamese insurance service suppliers, as well as in developing new products and improving service quality.
