Equal playing field for both domestic and foreign insurers
While domestic businesses dominate the market regarding non-life insurance operations, only Bao Viet Life participates into the non-life insurance market. Recently, Vietcombank-Cardif Life Insurance Joint Venture was established where Vietnamese side holds the majority stake. Thus, this is considered as the second
What will
Hesitancy in investing in the life insurance sector demonstrates difficulties in joining into the market. In addition to high requirements on chartered capital, namely Decree 46/2007/ND-CP promulgates that life insurers must have capital of at least 600 billion dong while this figure required for non-life insurers is only 300 billion dong; life insurance products are relatively complicated. Thus, no all business can get involved in life insurance operations.
Previously, Bao Minh had showed its ambition of expanding its activities to life insurance sector. Being established in 1999, Bao Minh Life Insurance Co (CMG) was the only insurance joint venture between Bao Minh (
Bao Minh CMG posted strong growth and was the market’s fifth largest life insurers regarding insurance premiums. Bao Minh CMG opened over 50 businesses offices nationwide by the end of 2007.
That Bao Minh CMG sold stake to Daiichi Insurance Group (
The stake transfer of Bao Minh CMG Joint Venture was made since 2007 however its echo has so far still been a challenge for domestic businesses in this sector. Therefore, when Vietcombank-Cardif Life Insurance Co (VCLI) officially has recently come into operation, this attracts great attention from both domestic and foreign life insurers.
With chartered capital of 600 billion dong in VCLI, Vietcombank contributes 45 percent, BNP Paribas 43 percent and Southeast Asian Bank (SeABank) 12 percent.
Nguyen Thi Tam, chair of VCLI, said that life insurance still presents great potential but contain various challenges.
VCLI will build a simple organisation model but not follow traditional ways of other businesses. VCLI will concentrate into designing products, calculating insurance premiums and others.
Product sales will be promoted via banks, firstly Vietcombank and SeABank, financial companies but not grand agent systems as many life insurance companies do currently.
VCLI targets to launch insurance products closely linked with daily life such as consumer loans, utility payment liabilities. Those are new service segments that many domestic businesses have not developed.
Coming out with innovative schemes would ways is perhaps the best way to survive in the tough competitive environment. At Bao Viet Life Insurance, member of Bao Viet Group, in the first six months, the company newly signed 78,500 contracts with total premiums of some 300 billion dong (USD 16,66 million), a year-on-year increase of 32 percent.
In the first half, total insurance premium revenue reached nearly 19 trillion dong, rising by 5.6 percent against last year. At the same time, Bao Viet Life Insurance settled insurance benefits for some 50,000 clients with total expenses of 400 billion dong (USD22,22 million)
