Foreign focus retained in insurance
Foreign focus retained in insurance
Capital advantages, brand reputation, and insurance consumption behaviour are being deemed the reasons why the majority of insurance brokerage market share in Vietnam is in the hands of foreign companies.
According to newly released statistics from the Ministry of Finance, by the end of 2022, more than 92 per cent of the insurance brokerage market share belonged to overseas investors.
The Department of Insurance Management and Supervision (IMS) under the same ministry noted that insurance brokerage activities were carried out mainly in non-life insurance (accounting 46 per cent of the total settlement fee) and health insurance (accounting for 22.38 per cent) last year.
Similar to previous years, property and casualty insurance is still the main business for insurance brokerage, accounting for 48.23 per cent of the total arranged insurance premiums.
According to the IMS, the total insurance premium arranged through brokers in 2022 was estimated at $664 million, up 7 per cent compared to 2021, with total insurance brokerage commission estimated at almost $50 million, up 11.14 per cent compared to the previous year.
In terms of market share, foreign-invested enterprises took up 92.3 per cent, with Marsh, Aon, and Willis Towers Watson making up 87 per cent.
Insurance company representative Anh Phan told VIR, “Foreign customers often require a broker to participate in the contract negotiation process, because of their deep expertise in insurance and understanding of international and domestic laws. They should be able to advise and offer comprehensive solutions with the most optimal cost, especially in difficult operations such as property or health insurance.”
In fact, according to Phan, most foreign-invested enterprises will require the use of brokers in negotiating insurance policies, while individual customers or domestic companies often refuse to use brokers for cost optimisation.
The prolonged pandemic in recent times has created the need for businesses to buy insurance for their employees as a welfare policy, creating opportunities for brokerage companies. With extensive product knowledge, insurance brokerages took part in consultation in unprecedented matters related to social distancing and medical treatment related to COVID-19, thereby increasing their reputation.
The gradually completed legal corridor is also helping the insurance market in Vietnam attract foreign capital.
With the Law on Insurance Business, which took effect in January, these enterprises now can expand their scope of activities related to insurance contracts, in addition to their main business. They not only provide ancillary services of ordinary insurance but also ancillary services related to insurance contracts at buyers’ request, including contract and compensation management as well as risk management consultation.
In the past four years, 13 insurance brokerage businesses have been licensed to establish and operate. In 2022, the MoF granted adjustment licences to several insurance brokerage enterprises including SPE, WTW, and Wellbe to carry out insurance auxiliary services.
At the same time, the MoF has officially recognised the participation of foreign investors in insurance brokerage such as Malaysia’s Malakut Insurance Brother Asia in the establishment of Malakut Insurance Brokerage Vietnam.
“The ability to expand helps insurance brokerage businesses to better develop their potentials and strengths, contributing to the increase in service value as well as the professionalism of the Vietnamese insurance market,” said a representative from the IMS.
Likewise, regarding the concern whether companies specialising in ancillary insurance may be affected by the expansion of insurance brokers, Truong Minh Cat Nguyen, CEO of TILA Finance, stated that there will be no overlap because each type of business has its own strengths and potential.
“In 2023, insurance brokerage and ancillary businesses both have great opportunities to separate the services and products that each party can perform. It all depends on customers’ habits of using the services,” Nguyen emphasised.
According to the Insurance Market Development Strategy to 2030, the regulatory agency will provide detailed instructions on insurance brokerage certificates and insurance auxiliary certificates with the aim of enhancing the sector’s quality and promoting the application of IT in insurance activities.
