Foreign capital strongly pours into Việt Nam’s non-life insurance market
Foreign capital strongly pours into Việt Nam’s non-life insurance market
Contrary to the current quietness of the life insurance industry, the non-life insurance industry has seen large acquisition deals of foreign investors.
View of a ceremony to announce strategic shareholders of DBI and BSH. DBI has become a strategic shareholder of both Vietnam National Aviation Insurance JSC (VNI) and Saigon - Hanoi Insurance (BSH). — Photo BSH |
Both Vietnam National Aviation Insurance JSC (VNI) and Saigon - Hanoi Insurance (BSH) late last month announced as their strategic shareholder Korea’s DB Insurance Co., Ltd (DBI). Accordingly, BSH shareholders finalised a contract to transfer 75 per cent of BSH shares to DBI, while VNI shareholders also approved a plan for DBI to receive the transfer of 75 million VNI shares, equivalent to 75 per cent of VNI charter capital.
Another foreign investor Pyn Elite Fund has aggressively bought Military Insurance Company (MIC) shares to become a major shareholder of the company with an ownership of 13.9 million shares, equivalent to 8.1 per cent of charter capital.
Besides these deals, the Vietnamese market has seen many other M&A activities in the insurance industry in recent years, such as VPBank’s purchase of an additional 47.85 million OPES insurance shares to increase its ownership ratio to 98 per cent of charter capital, and Tasco’s purchase of 100 per cent of Groupama Vietnam's capital and changed its name to Tasco Insurance.
According to experts, Việt Nam's insurance market currently still has a lot of room for development. According to statistics from the Ministry of Finance, the insurance penetration rate, calculated by insurance premiums per GDP, in Việt Nam in 2022 was only 2.6 per cent.
By 2023, due to the crisis of confidence in the life insurance sector, this penetration rate is estimated to have decreased to about 2.2. By 2025, this rate is expected to increase to 3.5 per cent.
Meanwhile, according to statistics from the Organisation for Economic Cooperation and Development (OECD), the penetration rate in developed countries such as the US and the UK can be up to 12 per cent. Some neighbouring countries such as Singapore and Malaysia also recorded penetration rates many times higher than that of Việt Nam.
A Vietnamese person on average spent about VNĐ2.3 million for insurance in 2023. Compared to 2017, the average insurance premium per capita has increased more than twice.
In 2023, despite a 12.5 per cent decrease in life insurance premium revenue to nearly VNĐ156 trillion, the non-life insurance sector kept increasing by 2.4 per cent to VNĐ71.1 trillion.
Health insurance and motor vehicle insurance, which were the two products contributing the most to non-life insurance premium revenue last year, still have a lot of growth potential, especially in the context of rising incomes and population ageing trends.
With rapidly rising incomes and the growing middle class, the need to travel by car could become a big driver of motor vehicle insurance premiums. According to data from the International Organization of Motor Vehicle Manufacturers (OICA), in Việt Nam, for every 1,000 people, 55 people own cars. In particular, Việt Nam has the fastest growing car ownership rate in the world. In the period from 2015 to 2020, this rate increased by 17 per cent yearly.
Regarding health insurance, the population ageing and the growing middle class are becoming main drivers for this sector. In 2023, revenue from the above two insurance groups slowed due to the weakening economy, but in previous years, the average growth rate of these two insurance groups was in the double digits.
On average, in the period from 2012 to 2023, insurance premium revenue of the non-life sector grew by 11 per cent yearly.
