(VEN) – Domestic insurers have actively adopted several solutions to adapt to the new circumstances including restructuring equity, improving financial capacity, ensuring portfolio performance, and restructuring administration and business development systems. Secretary General of the Vietnam Insurance Association Phung Dac Loc expressed hope for a bright future for the insurance industry this year when speaking to reporter Tien Dung.
Since the beginning of this year, a series of insurers have implemented restructuring strategies to overcome the challenges of the market. What do you think about the recent restructuring process?
At the beginning of the year, many market analysts agreed that if financially capable, investors will invest in insurance because of the lack of over burdened inventories and bad debts, while they can fully exploit the potential demand for domestic insurance.
Domestic insurers have overcome challenges in recent times, seized opportunities to ensure sustainable growth, written off losses, and effectively operated with better business results.
Regarding funding sources, domestic insurers have recapitalized to ensure good liquidity, safe portfolio performances, handling seriously doubtful debts (including debt premium), restructuring equity, and collaborating with strategic partners.
As for insurance products, domestic insurers have undertaken a review of insurance products so as to able to offer the appropriate suitable for socio-economic needs, particularly meeting the demands of increased insurable values (depreciation and disposal on expiry), private property, liability insurance, product liability insurance, professional liability insurance, health insurance and medical care insurance.
Additionally, domestic insurers have conducted restructuring towards modern organizational business management in accordance with decentralized management leadership capacity of each branch member companies; boldly downsizing the size of branches and subsidiaries that ineffectively operated and managed while enhancing after-sales services to attract customers.
New insurance products are currently being rolled out, including agricultural insurance. What do you say about the implementation of agricultural insurance?
In recent times, many domestic insurers have focused on developing new products and expanding their distribution networks so as to effectively receive and settle customer claims, with a view to exploiting potential market segments for personal property insurance, health insurance, product and professional liability insurance, employee group insurance, and general insurance.
Three domestic insurers, including Bao Viet Insurance, Bao Minh Insurance Corporation, and Vietnam National Reinsurance Corporation (Vinare), have followed the directions given by the government, the Ministry of Finance, Ministry of Agriculture and Rural Development to pilot agricultural insurance in 20 selected provinces and cities across the country. Last year, those three insurers already attracted more than 200,000 farmer households across the country into buying agricultural insurance, reaching total premiums of VND220 billion, contributing to the settlement of losses caused by natural disasters and diseases to plants, poultry and cattle. In addition, seven domestic insurers including Bao Viet Insurance, Bao Minh Insurance Corporation, Petrovietnam Insurance JSC, United Insurance Company of Vietnam, QBE Insurance Vietnam, Chartis Vietnam Insurance Company, and Bao Viet Tokio Marine Insurance have also piloted the export credit insurance.
Is there anything to look forward to for domestic insurers in the second half of the year?
Economic difficulties in the first half of the year have affected the growth and efficiency of the insurance industry. So domestic insurers should continue to develop insurance products including personal property insurance, product and professional liability insurance, life insurance, health and medical care insurance, and export credit insurance, while focusing on the development and management of rapidly growing insurance services such as life insurance and medical care insurance so as to ensure sustainable growth associated with effective prevention of insurance fraud.
Many of state policies favoring businesses are being implemented including reduction of corporate income tax to 22 percent (20 percent regarding small and medium enterprises and 10 percent regarding social housing businesses) and value-added tax grace period of 3-6 months for businesses. I believe these policies will create momentum for socioeconomic development in general and the insurance industry in particular. The government is striving to overcome socioeconomic difficulties and control inflation, solve the problem of outstanding inventories and remove bottlenecks to credit, while consolidating consumer confidence and creating new opportunities for socioeconomic development. Therefore, the non-life insurance industry can still hit its annual target and reach 12 percent growth rate while life insurance industry can reach 14 percent. These results will contribute to celebrating the 20th founding anniversary of the Vietnam’s insurance market on December 18, 2013./.