BizNEWS

Vietnam’s Insurance Market Has Lots of Potential, Japanese Investor Says

Diep Nguyen
BizLIVE -

The Japanese and Vietnamese government have been making efforts to tighten the bilateral relations to contribute to the two countries’ collaboration in various areas such as investment, trade, economy and security.

Vietnam’s Insurance Market Has Lots of Potential, Japanese Investor Says
Photo Credit: Accor
On August 31st, Bao Viet Tokio Marine Insurance Co. Ltd officially changed name and brand identity to Tokio Marine Insurance Vietnam Co. Ltd (TMIV). This strategic change is aimed at strengthening the brand position as the best Japan quality insurance service provider in Vietnam.
Recently, BizLIVE held an interview with Mr. Hideaki Maeomote - General Director of Tokio Marine Insurance Vietnam for his comments on the Vietnam’s investment environment and the potential of Vietnam’s insurance market. 
According to the General Director, Vietnam has been considered as one of the most favorable investment destinations in Asia by Japanese investors for the past decade. The Japanese and Vietnamese government have been making efforts to tighten the bilateral relations to contribute to the two countries’ collaboration in various areas such as investment, trade, economy and security. 
Besides that, recent improvement in developing a good, open and supportive economic environment in Vietnam for the past decade as well as competitive labor cost are also attractive factors towards Japanese investors. Official data shows that out of 98 countries and territories investing in Vietnam in the first six months of 2020, Japan ranked fourth in terms of newly registered capital with total amount estimated at USD 323.6 million.
In fact, Japanese corporations could explore various business opportunities in Vietnam. However, opportunities are not risk-free. Those who are able to manage risks would have better chances to success. And Tokio Marine Insurance Vietnam has done its best to support Japanese invested corporations in their development journey from early stage by not only qualified insurance coverage but also risk management consulting with market-leading and tailor-made solutions. 
The company’s risk consulting team consists of members with extensive background in risk management and loss prevention services and professionally trained by Tokio Marine risk engineering experts, who have hands-on experience in property, casualty, and engineering risks.
A number of the company added-value services to clients include risk management consultancy to help clients identify risks at their premises at early stages with appropriate loss prevention recommendation, safety management and loss prevention training to increase clients’ awareness of various on-site hazards and assistance on risk improvement… The company strives to be creative and innovative to bring about the best safety and security solutions to our clients.
In TMIV, the Japan Quality is characterized with a number of critical servicing standards including “speed”, “accuracy”, “professionalism”, “sincerity” and “security”. And it has become the key qualifications in both internal operation standards and services & products to our clients. The company has been launching an internal processing improvement project to streamline key operational steps and flows and thereby increasing processing speed and accuracy by applying certain workflow management innovative solutions along with technical tools offering advanced features and capabilities that help improve productivity effectively.
The Covid-19 pandemic has had a major impact on almost all economic sectors and insurance industry is not an exception. In Vietnam, the pandemic has been well managed by the government so far. However, Covid-19 has impacted the Vietnam’s insurance industry in different aspects. First, flexible and remote working as a result of social-distancing are needed across different sectors including insurance due to the coronavirus and this new way of working creates the opportunity for insurers to test and ensure that their businesses have sufficient connectivity to support more staff working off-site and in flexible ways. 
Second, the Covid-19 pandemic may cause many people to reconsider their personal financial planning including insurance need. Certain insurance solutions such as health insurance products would be in higher demand under tough situation in work and life. In respect of behavior, it is also expected that TMIV’s consumers would prefer to be approached, sold and serviced for insurance products in the most convenient way through digital platforms.
Vietnamese insurance market has been witnessing stable growth over the last 24 years. The liberalization of the country's insurance industry has offered numerous investment opportunities to foreign insurers. There is also a rising number of captive insurers, especially affiliates of banks and financial institutions. Also, there have been expansion of different distribution channels over the past 24 years with direct, broker, agent, bancassurance and recently digitalization. The insurance industry has grown first by corporate who invested here in Vietnam. And now the purchase of insurances is beginning to boost, but we find that the penetration of insurance products and services among Vietnamese people are not enough.
At the same time, there are also certain points that should be improved in the local insurance market. First, the management capacity and healthy performance of some non-life insurers have not yet met the standardized requirements, and there are still happening unhealthy competition among non-life insurers; Insurance premiums have not been built on the basis of statistics to ensure financial security and operational efficiency of businesses, which result in negative underwriting profits of certain players for the past years. Second, fraudulence in the insurance business has significantly affected the rights and interests of the insurers and the insured.
In the General Director’ s view point, Vietnam insurance market has a high potential as it is still not matured with low penetration. The penetration ratio of Vietnamese insurance market has been estimated at over 2% recently, and the government’s insurance plan also targets the penetration rate growing to 3% of GDP by 2020 and 3.5% by 2025. Nowadays the income of people is increasing along with their demand for insurance. Also, number of populations is rising to nearly 100 million. These are factors that would support for the quick growth of insurance industry in Vietnam.

DIEP NGUYEN