Vietnam’s general insurance industry will reach a total value of VND90.24 trillion (US$3.5 billion) in terms of gross written premiums (GWP) by 2026, according to market analyst GlobalData.
This represents a compound annual growth rate (CAGR) of 8.5 per cent, growing by around 50 per cent from a combined GWP value of VND 60.15 trillion in 2021.
The growth has reportedly been driven by a strong post-Covid economic recovery, combined with an increased frequency of natural disasters, and a growing number of compulsory insurance classes. Consequently, growth in the industry has largely reflected similar overall economic growth in the country.
“Vietnam’s economy is expected to grow at 7.3 per cent in 2022, following slowdown in 2020 and 2021, driven by strong government fiscal measures and growing manufacturing sector,” said Md Shabbir Ansari, Senior Insurance Analyst at GlobalData. “The economic growth will support general insurance industry growth, which is expected to grow by 7.3 per cent in 2022.
“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.”
Growing demand for private accident and health insurance
Personal accident and health (PA&H) insurance is the largest general insurance sector in Vietnam, accounting for a third (32.3 per cent) of GWPs in 2020, and growing by 5.1 per cent in the same year due to increased consumer awareness – driven by the coronavirus pandemic, a burgeoning middle class and rising medical costs. PA&H insurance is expected to grow at a CAGR of 8.2 per cent between 2021 and 2026.
Most (90 per cent) of the Vietnamese population is covered by mandatory public health insurance. However, GlobalData says that a ‘gap in coverage due to rising medical costs and disparity in the quality of public healthcare services’ has led to increased demand for private insurance. Currently, around seven-per-cent of the population has private health insurance.
Motor insurance was the second largest line, accounting for 30.5 per cent of general insurance GWP in 2020. The segment grew by 6.3 per cent in 2020, driven by recovery in motor vehicle sales. Motor insurance is expected to grow at a CAGR of eight-per-cent between 2021 and 2026.
Property insurance was the third-largest segment with 24.8 per cent GWP share in 2020. There is a growing demand for natural catastrophe insurance due to the increased frequency of natural disasters in the country.