The general insurance industry in Vietnam is projected to grow at a compound annual growth rate (CAGR) of 8.5% from VND60.15 trillion ($2.6bn) in 2021 to VND90.24 trillion ($3.5bn) in 2026, in terms of gross written premiums (GWP), according to GlobalData.
The growth of the Vietnamese general insurance industry will be supported by strong economic recovery, increased frequency of natural disasters, and growing compulsory insurance classes.
Md Shabbir Ansari, Senior Insurance Analyst at GlobalData, comments: “Vietnam’s economy is expected to grow at 7.3% in 2022, following slowdown in 2020 and 2021, driven by strong government fiscal measures and growing manufacturing sector. The economic growth will support general insurance industry growth, which is expected to grow by 7.3% in 2022.”
An analysis of GlobalData’s Global Insurance Database reveals that personal accident and health (PA&H) insurance was the largest general insurance line, accounting for a 32.2% share of the GWP in 2020. The segment grew by 5.1% in 2020 driven by increased consumer awareness due to COVID-19, growing middle-class population, and rising medical costs.
Nearly 90% of the Vietnamese population is covered under mandatory public health insurance. However, a gap in coverage due to rising medical costs and disparity in the quality of public healthcare services have supported the demand for private insurance. Almost 7% of the population currently avails private health insurance in the country. PA&H insurance is expected to grow at a CAGR of 8.2% during 2021-26.
Motor insurance was the second largest line, accounting for 30.5% of general insurance GWP in 2020. The segment grew by 6.3% in 2020, driven by recovery in motor vehicle sales. Motor insurance is expected to grow at a CAGR of 8.0% during 2021-2026.
Property insurance was the third-largest segment with 24.8% GWP share in 2020. There is a growing demand for natural catastrophe insurance due to the increased frequency of natural disasters in the country.
In addition, over the last couple of years, the government has added new products to increase the ambit for compulsory construction insurance. For instance, in June 2020, the government passed a law mandating the construction contractors to purchase insurance for construction workers working on sites, and civil liability insurance for third parties.
Another regulation on mandatory fire and explosion insurance came into effect in December 2021. It creates a transparent and unified legal framework for insurers and support insurance growth. Property insurance is forecasted to grow at a CAGR of 9.0% over 2021-2026.
Marine, aviation and transit (MAT), Liability, and Financial lines insurance accounted for the remaining 12.5% share.
Ansari concludes: “Vietnam’s economic growth looks strong over the next five years as it aims to become a high-income economy by 2045. Economic growth and favorable regulatory policies will support the growth of the Vietnamese general insurance industry.”