Vietnam life insurance slump continues, but a comeback is on the horizon
Vietnam’s life insurance market is projected to shrink for the third consecutive year in 2025, with gross written premiums (GWP) expected to decline by 1.3% to VND146.1 trillion (US$6 billion), according to GlobalData.
This follows contractions of 12% in 2023 and an estimated 5.7% in 2024, primarily due to regulatory issues in bancassurance and broader economic factors.
Despite the near-term decline, the sector is forecast to return to growth in 2026, supported by demographic trends, increased household income, and policy measures aimed at restoring consumer confidence.
GlobalData estimates a compound annual growth rate (CAGR) of 3.2% from 2025 to 2029, with the market reaching VND165.4 trillion (US$6.4 billion) by the end of the period.
Regulatory challenges and consumer confidence
Concerns over sales practices in bancassurance, which accounts for a significant portion of life insurance distribution in Vietnam, have contributed to declining consumer trust.
Swarup Kumar Sahoo, senior insurance analyst at GlobalData, noted that mis-selling practices, unclear policy terms, and the perception that some life insurance products were tied to bank loans have led to consumer scepticism.
“Irregularities in life insurance distribution have led to a decline in consumer confidence, resulting in life insurance market contraction during 2023-24,” he said.
This decline in trust has resulted in an increase in policy cancellations, with the number of active life insurance policies dropping by 7.5% in 2023 and an estimated 3.7% in 2024. At the same time, life insurance penetration has fallen from 1.9% in 2022 to an estimated 1.3% in 2024.
The Vietnamese government has implemented regulatory changes to address these concerns. The revised Insurance Business Law, which took effect in November 2023, prohibits the sale of life insurance products within 60 days of loan disbursement and imposes penalties on banks that tie non-mandatory insurance products to loans.Key growth drivers and future outlook
Endowment insurance, which accounted for approximately 86.1% of GWP in 2024, remains the dominant product segment. New offerings, such as savings-linked policies with coverage for critical illnesses and hospitalisation introduced in March 2024, are expected to support further demand, particularly among Vietnam’s ageing population.
Insurers are also increasingly leveraging technology to improve distribution and customer service. The adoption of artificial intelligence, big data analytics, and digital platforms is expected to enhance efficiency and policyholder engagement.
Supplementary insurance, which provides additional coverage through riders, continues to gain traction. This segment’s market share is expected to rise from 12.3% in 2024 to 13.7% in 2029, with an anticipated CAGR of 4.9% during the period.
Sahoo expects the market to return to growth in the coming years – with regulatory reforms, technological advancements, and customer-focused products expected to help rebuild trust in the life insurance sector.
“The aging population and rising healthcare costs will drive demand for comprehensive insurance products, ensuring a steady growth trajectory for the life insurance market over the next few years,” he said.
Related Stories