Insurance industry forecast to fail some targets by 2025
HÀ NỘI — Some of the Government’s targets set for the insurance industry by 2025 might have to be adjusted down as it is difficult to meet the targets.
The Government aims for 15 per cent of the population to have life insurance, with the average premium as per GDP ratio, at 3.5 per cent by 2025.
Previously, the targets were considered to be consistent with the country’s Socio-Economic Development Strategy for the 2021-2030 period and other developmental indicators in the period.
However, Deputy General Secretary of the Vietnam Insurance Association, Ngô Trung Dũng, said that the number of life insurance contracts in effect in Việt Nam by the end of September only reached about 12 million, down around 11 per cent compared to the same period last year. This number of contracts is relatively low compared to the population of more than 100 million people and is still far from the targets set by the Government.
According to Director of ITmedia Vietnam Insurance Services Co., Ltd. Đặng Đình Chính, in 2025, the insurance market will find it difficult to achieve the target of 15 per cent of the population taking out life insurance.
Chính explained that in 2025, it would even be a struggle to increase the rate of the population joining life insurance by about 1.5-2 per cent (equivalent to 1.5 – 2 million people). The higher rise of 3-4 per cent (equivalent to 3-4 million people) would be too high to be even feasible and would be beyond the capacity of life insurance companies in the whole market.
Chính added that many banks had stopped selling insurance, which had also slowed growth.
Agreeing with their forecasts, Chairman of the Board of Directors of Techcom Non-Life Insurance Joint Stock Company, Chung Bá Phương, said the insurance market would find it difficult to achieve the two major goals set by the Government. In 2024, it was predicted that only 10 per cent of the population would participate in insurance and the penetration rate of total life insurance premiums is estimated to reach only one per cent of GDP.
The Vietnamese life insurance market is developing slowly compared to many other markets in the region and in the world. In many countries, the ratio of bank accounts to the number of life insurance contracts may be similar. In Việt Nam, the rate of people having bank accounts is now at more than 87 per cent, but only 12 per cent of the population has some form of life insurance.
The main cause for the big gap between the number of people participating in life insurance and the number of bank accounts in Việt Nam is the crisis of confidence in the insurance sector, which has caused the sector to decrease dramatically in the past two years. The crisis occurred after clients complained of vague provisions in life insurance contracts that favoured insurance companies rather than clients. In addition, bancassurance also faced criticism, as clients were reportedly forced to buy insurance packages as a condition of being able to take out bank loans. — VNS