Vietnam’s general insurance industry is projected to grow at a compound annual growth rate 8.5 per cent from $2.6 billion in 2021 to $3.5 trillion in 2026, in terms of gross written premiums (GWP), according to GlobalData.
The leading data and analytics company noted that the growth of the Vietnamese general insurance industry will be supported by strong economic recovery, increased frequency of natural disasters, and growing compulsory insurance classes.
Shabbir Ansari, Senior Insurance Analyst at Global Data said: “Vietnam’s economy is expected to grow at 7.3% in 2022, following a slowdown in 2020 and 2021, driven by strong government fiscal measures and growing manufacturing sector. The economic growth will support general insurance industry growth…”
An analysis of GlobalData’s Global Insurance Database reveals that personal accident and health (PA&H) insurance was the largest general insurance line, accounting for a 32.2 per cent share of the GWP in 2020. This was driven by increased consumer awareness due to COVID-19, growing middle-class population and rising medical costs.
According to GlobalData, almost 90 per cent of the Vietnamese population is covered under mandatory public health insurance. However, a gap in coverage due to rising medical costs and disparity in the quality of public healthcare services have supported the demand for private insurance.
Growth Composition for Types of PA& H
Nearly 7 per cent of the population currently benefit from private health insurance in the country. That said, personal accident and health insurance (PA&H) is therefore expected to grow at a CAGR of 8.2 per cent during 2021-2026.
Motor insurance was the second largest line, accounting for 30.5 per cent of general insurance GWP in 2020. The segment grew by 6.3 per cent in 2020, driven by recovery in motor vehicle sales. Motor insurance is expected to grow at a CAGR of 8.0 per cent during 2021-2026.
Property insurance was the third-largest segment with 24.8 per cent gross written premiums (GWP) share in 2020. Also, there is a growing demand for natural catastrophe insurance due to the increased frequency of natural disasters in the country.
In addition, over the last couple of years, the Vietnamese government has added new products to increase the coverage for compulsory construction insurance. For instance, in June 2020, the government passed a law mandating the construction contractors to purchase insurance for construction workers working on sites, and civil liability insurance for third parties.
Another regulation on mandatory fire and explosion insurance came into effect in December 2021. The law creates a transparent and unified legal framework for insurers and support insurance growth. Property insurance is forecasted to grow at a CAGR of 9.0 per cent over 2021-2026. Marine, aviation and transit (MAT), Liability, and Financial lines insurance accounted for the remaining 12.5 per cent share.
“Vietnam’s economic growth looks strong over the next five years as it aims to become a high-income economy by 2045. Economic growth and favorable regulatory policies will support the growth of the Vietnamese general insurance industry.”
Shabbir Ansari
Vietnam is not the only country to see such improved growth in demand for insurance. The growing demand for insurance in Vietnam mirrors similar rises in other East Asian countries, such as Hong Kong and South Korea, according to GlobalData.
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