Competition heats up in insurance market

06:58' 11/04/2008 (GMT+7)
VietNamNet Bridge - Domestic insurance companies continue to worry about the constant increase of capital and new products offered by foreign owned insurance companies, a change in competition that is due to the removal of all legal barriers in the sector on January 1, 2008 as part of the implementation of Vietnam’s WTO commitments.
Dai-ichi Life, a life insurance firm in Japan , decided earlier this year to raise its capital to 72 million USD after only one-year operation in Vietnam.
Liberty Insurance (Vietnam), a 100 percent US owned company began to provide insurance service directly to state owned enterprises, Vietnamese individuals and motor insurance including compulsory public liability. It was previously only licensed for providing non-life insurance service for foreign individuals and businesses.
Liberty became the first US insurance company to expand its business in Vietnam according to the country’s WTO commitment and also the first foreign non-life insurer to provide compulsory motor vehicle insurance service in Vietnam. Liberty has also increased its capital from 10 million USD to 20 million USD.

General Director of Liberty in Vietnam, Thomas O’Dore said that his company will immediately provide insurance services for customers who buy new motor vehicles. “We do not compete in price, but in the quality of service,” he said, adding that his company plans to introduce GPS technology in Vietnam in order to meet all demands of clients.

The foreign owned, Prudential Vietnam , the leading life insurer with 41 percent of the market share, has also been permitted by the Finance Ministry to expand the scope of its business and deploy investment association activities.

These moves by foreign insurers have made domestic insurance companies worried about severe competition.

The presence of foreign insurers provide clients with greater choice and creates new standards in the insurance sector, General Director of Bao Minh Insurance Company Tran Vinh Duc affirmed. However, he said, it is not easy for domestic insurers to take part in the competition.

Like other domestic insurers, Bao Minh has made preparations for the predicted severe competition including investing in personnel training in IT application and improving business management.

According to experts, the Vietnamese insurance market has great potential as the sector’s revenue represents only 2 percent of GDP, compared to about 6-8 percent in other regional developed countries.