Some of the targets set for the country's insurance industry by the Vietnamese government may have to be worked down or may need to be adjusted as it is difficult to meet these targets.
The government had set a target of 15% of the population to have life insurance, with the average premium as per GDP ratio, at 3.5 per cent by 2025. Previously, the targets were considered to be consistent with the country’s Socio-Economic Development Strategy for the 2021-2030 period and other developmental indicators in the period.
According to a news report published in https://vietnamnews.vn/economy deputy general secretary of the Vietnam Insurance Association, Ngô Trung Dung, said that the number of life insurance contracts in effect in Vietnam by the end of September 2024 had only reached about 12m, down around 11% compared to the same period in the previous year. This number of contracts is relatively low compared to the population of more than 100m people and is still far from the targets set by the government.
According to IT Media Vietnam Insurance Services director Ð?ng Ðình Chính, in 2025, the insurance market will find it difficult to achieve the target of 15% of the population taking out life insurance.
Mr Chính said that in 2025, it would even be a struggle to increase the rate of the population joining life insurance by about 1.5%-2% (equivalent to 1.5m – 2m people). The higher rise of 3-4% (equivalent to 3m-4m people) would be too high to be even feasible and would be beyond the capacity of life insurance companies in the whole market. He said that many banks had stopped selling insurance, which had also slowed growth.
Board of Directors of Techcom Non-Life Insurance Joint Stock Company chairman Chung Bá Phuong said the insurance market would find it difficult to achieve the two major goals set by the Government. In 2024, it was predicted that only 10% of the population would participate in insurance and the penetration rate of total life insurance premiums is estimated to reach only 1% of the GDP.
The Vietnamese life insurance market is developing slowly compared to many other markets in the region. In many countries, the ratio of bank accounts to the number of life insurance contracts may be similar. In Vi?t Nam, the rate of people having bank accounts is now at more than 87% but only 12% of the population has some form of life insurance.
The main cause for the big gap between the number of people participating in life insurance and the number of bank accounts in Vi?t Nam is the crisis of confidence in the insurance sector, which has caused the sector to decrease dramatically in the past two years. The crisis occurred after clients complained of vague provisions in life insurance contracts that favoured insurance companies rather than clients. In addition, bancassurance also faced criticism, as clients were reportedly forced to buy insurance packages as a condition of being able to take out bank loans.