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Mr. Phung Ngoc Khanh

It can be said the insurance market has developed actively, contributing largely to the socio-economic development. Could you tell us the progress details of the insurance industry over time?

After more than 20 years of development, especially after implementing the strategy of developing the insurance market in Vietnam and restructuring insurance companies, the insurance market has constantly improved and grown up in terms of scale, number of enterprises and quality of products and services.

By the end of 2018, the insurance market has 64 insurers, including 30 non-life insurance companies, 18 life insurance companies, 2 reinsurance companies and 14 insurance brokers. In addition, we also have 1 foreign non-life insurance subsidiary.

The insurance market has increasingly shown its role and position in the socio-economy, reflected in a number of specific indicators in 2018 and the average growth rate in the period 2011-2018. Specifically, in 2018, total assets are estimated at 390,717 billion VND, an average increase of 18%/ year (16% in the period of 2011-2015, 23% in the period 2016-2018). Total investment is estimated at 324,644 billion VND, an average growth rate of 19%/ year (16% in the period 2011-2015, 24% in the period 2016-2018).

Total reserves are estimated at 247,500 billion VND, an average growth rate of 21%/ year (the period 2011-2015 is 15%, 2016-2018 is 27%). Total equity is estimated at 82,584 billion VND, an average growth of 13%/ year (the period 2011-2015 is 9%, 2016-2018 is 20%). Total insurance revenue is estimated at 151,001 billion VND, an average growth rate of 23%/ year (23% in the period 2011-2015, 21% in the period 2016-2018). Every month, insurance companies pay an average of about 2,500 billion vnd.

With such development, no wonder the insurance market in Vietnam has received strong attention from foreign investors. What makes this attractive, sir?

From 2015 to 2015, the Ministry of Finance held Investment Promotion Conferences in the US, Japan and South Korea with the participation of large enterprises and financial corporations in the world. At these conferences, policy issues, the business environment and the potential of the insurance market were introduced and discussed, and were attractive to foreign investors.

The investment promotion conference has created a strong point for the insurance market to develop strongly and safely, contributing to the implementation of the Party and Government's objectives and programs; at the same time, creating conditions for the good performance of the insurance sector's role in the economy.

By 2015, the market revenue only grew by under 18%. After the investment promotion conferences, the growth has been over 20% (2015: 25%, 2017: 26%), own equity alone (investment capital in Vietnam) almost doubled (1.74 times) in the period 2015-2018, from 45,157 billion VND in 2015 to 78,584 billion VND in 2018; the reinvestment capital to the economy has increased 2 times, from 160.258 billion VND in 2015 to 324.644 billion VND in 2018. Particularly for life insurance sector, where most foreign investors concentrated in, only 3 years from 2016 to 2018, on average, owners’ equity increased by 30%/ year, and total premiums increased 30%/ year. The total return on investment increased by 28%/ year.

The above figures show the strong confidence of investors in the insurance market and created a momentum for the fast-growing market in 2015-2018.

In addition to the impressive growth figures, as the regulator, in order to maintain market stability and protect the interests of insured participants, the Ministry of Finance requires insurers to pay attention on ensuring the full provision to meet the commitments to organizations and individuals participating in insurance (in the period 2015-2018, the total reserve increased more than 2 times), raising corporate governance and customer service quality.

It must be confirmed that the development of the insurance industry is quite impressive. So, how can you sum up the contribution of the insurance industry to the overall development of the economy?

It can be said that in recent years, the insurance market has played an active role in supporting the economic development, creating psychological peace of mind for investors, enterprises and people.

Firstly, insurance protects financial losses (if any) of the investors, producers. According to the statistics of insurance companies, about 80% of the large infrastructure construction works of the State are protected by insurance companies in case of insurance events without using funds from the State budget, contributing to the implementation of fiscal policies.

Secondly, insurance contributes to social security policies, by meeting the diverse needs of insurance organizations and individuals. Currently, nearly 7.5 million people take part in life insurance, equivalent to 8% of the population, 4 million people take part in health insurance, short-term health insurance; 12 million students were covered by health insurance and accident insurance (nearly 60% coverage); 18 million passengers were covered by aviation insurance (100% penetration rate); over 12 million passengers were covered by railway accident insurance (100% penetration rate); 1,620 million passengers were covered by road passenger accident insurance (61% penetration rate).

Thirdly, insurance contributes to macroeconomic stability, increasing investment returns to the economy.

Since 2000, the life insurance market has maintained a high growth rate (21.6% per year), mobilized nearly 300 trillion VND of idle capital in the economy (non-life insurance sector is 41,000 billion vnd, life insurance sector is 258,450 billion VND), mostly through the form of premiums on long-term savings and investment policies (over 10 years), contributing to curbing inflation, increasing savings for the economy through the addition of stable long-term investment for the economy. Of these, 70% were invested by the real estate companies in government bonds, thus contributing to stabilizing the plans for issuance of Government bonds.

Insurance firms plan to go digital Most insurance businesses are planning to apply new technologies in management systems and improving customer services

Fourthly, the development of the insurance industry has promoted international economic integration with international and regional insurance markets, thereby contributing to the effective implementation of the Party and State's guidelines for international integration.

Since 2003, the insurance regulator has been consolidated and became a member of the International Association of Insurance Regulators (IAIS) in 2007. The insurance market is more open for foreign investors under the bilateral trade agreements between Vietnam and other countries such as the EU and the United States, facilitating Vietnam's textile, garment and footwear markets to penetrate these markets.

The international co-operation on insurance has been expanded. In addition, insurance companies and insurance associations have also expanded their relationships with international insurance companies, reinsurance companies and insurance associations in the region to enhance the opportunities for expansion in foreign countries, to improve the financial capacity and protect Vietnamese insurance enterprises in case of compensation for natural disasters and diseases, to attract investment capital, transfer technology, promote training and exchange of information to a better insurance business.

Especially, the insurance sector has made great contributions to the implementation of the Government's targets, tasks and programs on such subjects as agricultural insurance pilot; export credit insurance pilot; expansion and development of new insurance products.

Thank you, Sir!