The Asean Economic Community (AEC) will be established on December 31st 2015, and there is a question on the position of the Vietnam’s commercial insurance on the overall map of the Asean at this historical time.
According to data in 2014 of the Asean Insurance Association, the insurance market of Vietnam ranks sixth in the region. However, Vietnam has just above three percent regional market share, equivalent to about one ninth of Singapore, the largest market of the region, and half of the fifth largest market which is the Philippines.
Regarding non-life insurance, Vietnam ranks sixth with approximately six percent market share, equivalent to one fifth of the largest market – Thailand and nearly equalled to the Philippines which holds the fifth position. Concerning the number of insurers, Vietnam has 30 companies out of the total 331 non-life insurers operating in the Asean market, equivalent to a nine percent proportion, ranks fifth after Indonesia (79 companies), the Philippines (67 companies), Thailand (61 companies), and Singapore (57 companies). The total assets of Vietnam’s non-life insurers rank sixth in the region, accounting for respectively one eighth, one fifth, one fifth, one forth, and half of the total assets of the non-life insurers in Thailand, Malaysia, Indonesia, Singapore, and the Philippines.
Regarding life insurance, Vietnam is in the sixth position with over two percent market share, equivalent to one 15th of that of Singapore, the largest life-insurance market in the region, and nearly half the number of the Philippines’ market, the fifth largest market. Vietnam has 17 life insurers, accounting for nearly 11 percent of the total 155 life insurance companies in the Asean, ranks fifth in the region, after Indonesia (51 companies), the Philippines (27 companies), Thailand (23 companies, including 16 life-insurance companies and five companies offering both life-insurance and non-life insurance products).
Regarding insurance penetration (insurance revenue to Gross Domestic Product GDP), Vietnam holds the seventh position, after six countries in the Asean-6 with very low level of 1.31 percent, while the average level of the region is 3.13 percent,
The non-life insurance market of Vietnam has 29 operating insurers (including 12 companies with 100 percent foreign investment or joint ventures with foreign partners) and one branch of foreign insurer. The top five companies in the market are all domestic ones (including 100 percent domestic invested units or the joint stock units of which domestic shareholders hold dominant ownership rate). These five companies are owning about 65 percent market share of the non-life insurance market.
In contrast, there is only one domestic unit in the total 17 operating life insurers in Vietnam, while the remaining 16 units are 100 percent foreign invested or joint ventures with foreign partners. Bao Viet Life Insurance is the only domestic insurer in the top five leading life insurance companies in terms of market share, being in the second position with about 28 percent market share while the group holds approximately 90 percent market share. This is a common feature of the insurance markets of the countries in the Asean, except for the life insurance market of Singapore.
Prudential and AIA are the names that often included in the list of top five leading life insurers of six leading insurance markets in the region. The Great Eastern Life Insurance from Singapore is a rare name to expand operations to other countries like Malaysia, Indonesia, the Philippines, Brunei, and Vietnam. It has recently established a representative office in Myanmar for market research purpose towards establishing life insurance company in Myanmar.
At the time of AEC’s formation, the Asean divides the member countries into two groups, including the Asean-6 (countries having higher-developed economy and financial sector such as Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand), and the CLMV group (countries being less-developed including Cambodia, Laos, Myanmar, and Vietnam).
The liberalisation of financial services will be implemented under the Asean – X model. Accordingly, the prepared countries will carry out first, and other countries will participate when it is appropriate. The CLMV group has more favourability while implementing the commitments in line with the national policy objectives and the economic and financial development level of each country.
Nevertheless, according to report of the Department of International Relations, Ministry of Finance of Vietnam, the commitment to open the financial service market of Vietnam offers almost the highest openness level, particularly for insurance sector. Specifically, Vietnam allows foreign investors to provide insurance services across borders to foreign invested companies and to foreigners who work in Vietnam.
The open sectors include international transport insurance, reinsurance, insurance brokerage, reinsurance brokerage, and ancillary services. Vietnam also allows foreign investors to establish 100 percent foreign invested insurance companies (the establishment of the branches of foreign insurers in Vietnam has not been allowed, except for non-life insurance branches).
Source: DTCK
Key words: The position, Vietnam insurance market, Asean ranking
