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| Insurance faces many challenges before |
Insurance faces many challenges before
Starting
from January 1, 2008, according to WTO commitments, Vietnam's insurance market
will actually open completely, with the permission of foreign-invested
insurance companies to provide insurance services. compulsory insurance.
At
that time, domestic insurance enterprises will have to face greater competitive
pressure, when the participation of foreign investors in Vietnam's insurance
market is more, deeper and wider.
Although
New York Life recently suddenly said goodbye to the Vietnamese market, the presence
of Dai-ichi, a Japanese life insurance business, as well as the appearance of
HSBC in this field, proved that Vietnam's insurance market is very attractive
in the eyes of foreign investors.
Challenges for both sides
According
to Mr. Kenneth Juneau, General Director of AIA Vietnam, 95% of the potential of
Vietnam's insurance market remains untapped and this is a great opportunity for
foreign insurance companies. This is also what the General Director of AIA
expects, and also poses many challenges for Vietnamese insurers and foreign
insurers operating in Vietnam.
Allowing
foreign-invested enterprises to purchase insurance from overseas insurers could
have a major impact on insurers currently operating in Vietnam, and perhaps the
affected group.
The
most affected are foreign-invested insurance companies, because at present, the
main customers of foreign-owned non-life insurance companies are
foreign-invested enterprises operating in Vietnam. Vietnam.
These
foreign-owned enterprises, especially subsidiaries of transnational
corporations, when given the freedom to choose insurance providers, are most
likely to choose to use the services of these companies. Overseas insurance
under the parent company.
AON
is the first insurance brokerage enterprise to set foot in the Vietnamese
insurance market. Recently, the Ministry of Finance has granted permission to
bring the total number of insurance brokerage companies operating in Vietnam to
7 companies, of which 4 are joint stock companies and 3 are 100% foreign owned.
Vietnam's
commitment to allow the provision of cross-border brokerage and consulting
services will create favorable conditions for overseas insurance brokerage
companies to access foreign-invested enterprises in Vietnam. introduce overseas
insurance services.
This
is one of the big challenges for brokerage companies operating in the
Vietnamese market, especially domestic brokerage companies due to their network
of relationships with overseas insurance companies, their knowledge and skills.
As well as the experience of overseas insurance of Vietnamese enterprises is
very limited, if not completely absent.
Competition in thenon-life sector
According
to experts in the insurance industry, competition will be greater in the field
of non-life insurance than in life insurance, due to the fact that the life
insurance market has been open for more than a decade, while the non-life
market has not.
It
is possible that in the near future the effects of the removal of restrictions
on national treatment and the provision of compulsory insurance will not be
apparent, since in most of these insurance sectors the acquisition of Getting a
contract depends a lot on the relationship between the insurance company and
the project owner.
Foreign-owned
insurance companies, which have just entered this market, have not been able to
have a good network of relationships with project owners like domestic
insurers, similar to life insurance businesses. Newly established foreign
countries will also need many years to acclimate to the local culture, gather
information, build a network of insurance sales, etc.
However,
these advantages of insurance companies in the country. water will gradually
disappear in a longer future, when foreign-invested insurance enterprises have
established relationships, and the equitization process of State-owned
enterprises is implemented more widely. with it the 5 year transition period
for the opening of the non-life insurance branch will pass.
Geographically,
although there will be no restrictions on the number of domestic branches for
foreign-invested insurers, the competitive pressure from this issue will
probably not be great. Currently, foreign insurers are mostly concentrated in
large urban areas due to their greater attractiveness and small number of
foreign enterprises. market narrowness in urban areas.
For
the reinsurance market, the National Reinsurance Company of Vietnam (Vinare)
will lose the guarantee of a large amount of compulsory reinsurance premiums.
Competition
in this area will be huge, as the customers of domestic reinsurers are foreign
insurers rather than individuals, so cultural barriers do not help the
reinsurers. Domestic reinsurers avoid competition with larger and more experienced
and reputable foreign reinsurers, as in the case of primary insurance.
To
face this challenge, Vinare was also reorganized in 2004 to have better capital
mobilization capabilities and a more flexible organizational and management
mechanism. In recent years, the ratio of compulsory reinsurance premiums to
total premiums has begun to decline, giving way to voluntary reinsurance
premiums.
The
insurance market is expected to grow in size, so domestic insurers still have
the opportunity to grow premiums and increase income, and this is the concern
of businesses, not must be market share.