The life insurance market is growing at a high rate

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This is the fifth consecutive year that the life insurance market maintains a high growth rate of 25-30 percent / year. Photo: Internet.

Expenditure for compensation of over VND 14 trillion

According to insurance enterprises, as of the beginning of October 2019, the total fee revenue of life insurance enterprises was estimated at VND 74,477 billion, up 24.5 percent compared to 2018. This is the fifth consecutive year that the life insurance market maintains a high growth rate of 25-30 percent/year. The insurance products are diversified with more than 450 products, meeting the insurance demand of more than 9.8 million people participating in insurance with total insurance amount of more than VND 2.1 million billion.

As of October 2019, the total assets of life insurance enterprises were estimated at VND 353.4 trillion, up 22.18 percent compared to 2018, accounting for 80 percent of total assets of the market. The total amount of life insurance enterprises invested to the economy was VND 327.9 trillion, up 24 percent, accounting for 88.6 percent of the total investment capital to the economy of the whole insurance market. Total professional reserves of life insurance enterprises were estimated at VND 247.9 trillion, up 17.3 percent compared to 2018 and 89.7 percent of the total professional provision of the market.

In the first nine months of 2019, life insurance enterprises paid compensation and insurance payments of more than VND 14.4 trillion, helping organisations and individuals participating in insurance develop and implement financial plans, thrift and financial protection against risks, contributing to creating a favourable environment for socio-economic development.

According to Ngo Viet Trung, Deputy Director of Insurance Administration and Supervision Department under the Ministry of Finance, with the function of performing state management of the insurance business, the Ministry of Finance has provided positive solutions to promote the development of life insurance.

Regarding mechanisms and policies, the legal framework for life insurance has been improved, creating a synchronous, transparent and equal legal environment for businesses of all economic sectors in accordance with international standards and Vietnam’s commitments. When participating in Vietnam's insurance market, domestic and foreign enterprises are treated equallyland the law always protects finances for investors. The Ministry of Finance has proposed reducing and simplifying 50 percent of business investment conditions in the insurance sector. For the life insurance sector, conditions for agents selling Unit-Linked Product have been simplified, contributing to creating favourable conditions for insurance enterprises to expand networks and develop business activities.

Notably, due to the impact of the 4.0 information technology revolution and technological reforms and to create a premise for insurance enterprises to deploy the application of digital insurance, the Ministry of Finance has submitted to the Government for promulgation Decree 165/2018/ ND-CP, supplementing guidelines for electronic transactions in insurance.

According to Trung, the Ministry of Finance has also strengthened management, enhanced quality and combined flexibly between remote management and supervision and on-site inspections.

Perfect mechanisms and policies

On February 28, 2019, the Prime Minister issued Decision No. 242/QD-TTg approving the scheme on restructuring the securities and insurance markets up to 2020 and orientations to 2025, with the goal of developing a safe, sustainable and effective insurance market to meet the diverse insurance demands of organisations and individuals and ensure social welfare; insurance enterprises with strong financial capacity, executive and management capabilities meeting to international standards, and competitiveness in the country and region.

To achieve these goals, the Ministry of Finance has provided solutions, including general solutions for the insurance market and specific solutions for the life insurance sector.

“For life insurance, the Ministry of Finance is currently researching and developing the revised Insurance Law, transforming the management and supervision model towards management and supervision on the basis of risk managment to increase autonomy and responsibility of enterprises in financial management and business administration activities. This will help enhance efficiency and effectiveness of management and supervision; promote application of science and technology; improve the competitiveness of insurance enterprises, strongly improve the insurance business environment, improve the growth quality of market,”Trung said.

In addition, the Ministry of Finance will enhance information transparency of insurance enterprises in the direction of requiring insurance enterprises to publicise information fullyand promptly to help insurance buyers and relevant organisations to understand the organisational structure, business activities, performance and financial situation of the enterprises.

Notably, the Ministry of Finance will diversify methods and develop insurance products in line with business trends associated with the 4.0 technology revolution, meeting customer needs and ensuring simplification in verification and payment of benefits to customers using high technology, but still ensuring safety and prudence for insurance enterprises, preventing and controlling risks.

For life insurance enterprises, to continue promoting their strengths and maintain rapid growth momentum, the Ministry of Finance recommends each enterprise also develop and improve the quality of its human resources and improve its capacity. financial resources, strengthening financial management, risk management, improving competitiveness to meet market requirements.