Continuing on from the growth momentum posted in 2020, 75 per cent of insurance companies in Vietnam participating in a Vietnam Report survey have also recorded positive results this year. Due to the fourth wave of Covid-19 in the country, however, insurers have become more cautious about their business prospects in the second half of the year, the survey found. While the life insurance penetration rate per GDP is relatively low compared to regional peers, the lucrative industry, especially life insurance, offers high-yield returns for both investors and participants. Despite a gloomy outlook to the end of the year, major life insurers in Vietnam remain optimistic about their recovery and market growth in the long run.

Positive performance 

Total insurance premium revenue in the first half of 2021 increased 17 per cent compared to the same period last year, with an estimated rise of 11 per cent in the second quarter year-on-year, in which life insurance premiums surged 22 per cent and non-life insurance 7 per cent. As of the end of May, investment from insurance enterprises into the economy was estimated at $22.32 billion, a 26.7 per cent increase year-on-year, while total assets in the insurance sector reached $27.34 billion, up 23.2 per cent.

Life insurers in Vietnam are therefore doing quite well despite Covid-19. Manulife Vietnam said its performance was stronger than expected, with it leading in the market in First-Year Premiums (FYP), accounting for 22.7 per cent of market share for 83 per cent year-on-year growth.

Similarly, having grown impressively last year, AIA Vietnam continued to post remarkable results in the first half. Despite the difficulties wrought by the pandemic and social distancing measures, it successfully launched a series of new products and services in July, including a Remote Sales Tool that allows its sales team to consult with and complete an insurance profile for customers without face-to-face meetings, the establishment of the Life Advisor service, and the announcement of an exclusive partnership with Tiki. “This is the first comprehensive exclusive partnership between a life insurer and a top digital platform in Vietnam, aimed at helping Vietnamese families ‘Live Healthier, Longer and Better Lives’,” said Mr. Wayne Besant, CEO of AIA Vietnam.

Another leading foreign life insurer, Prudential Vietnam, has maintained sustainable growth and enhancements in its business operations. Overcoming the impact of Covid-19, the company recorded total revenue of $1.48 billion in 2020, of which net revenue from insurance activities was $1.1 billion. It also settled more than $291.8 million in claims last year, up 8.1 per cent against 2019 and representing nearly 30 per cent of the industry’s total settlements.

Covid-19 and social distancing has created difficulties in face-to-face interaction between sales agents and customers, but has also raised people’s awareness about life insurance, according to Ms. Nguyen Thu Ha, Manager of Equity Research at SSI Research. “Life insurers are finding ways to adapt to the new circumstances,” she said. “Both the agent channel and bancassurance have been negatively affected by social distancing. So, life insurers have been accelerating their digital adoption process as it is an inevitable trend both locally and globally. Applying data in market analysis and product development, and improving the customer experience through online sales software and online contract issuance, etc., are examples of IT initiatives that life insurers have been developing to overcome the impact of the pandemic.”

Catalyst for digital transformation

It can’t be denied that Covid-19 has been challenging for all, but it has also spurred the use of technology among the population and these newly-found habits are taking root. “This is particularly so in Vietnam, where people are using e-commerce in a multitude of ways in their daily lives, in turn influencing their expectations from insurance companies,” Mr. Sang Lee, CEO of Manulife Vietnam, observed. “As a result, the pandemic has accelerated the digital transformation of the industry, and Manulife Vietnam has been able to further optimize the situation through a multi-channel approach for connecting with customers. While traditional distribution channels will always play a vital role in protecting people, in an age of increasingly digital lifestyles and habits, giving customers choices on how they engage with an insurer, be it virtual or physical, is incredibly important.”

Responding to growing demand from the public for e-commerce products that talk to today’s digital generation, Manulife Vietnam recently launched its Manulife Shop website. This platform makes it even easier for Vietnamese customers to gain access to affordable health protection solutions while further changing the perception of insurance. It is also continuing to diversify its product and service offering through strategic bancassurance and other partnerships.

The recent agreement between AIA Vietnam and Tiki, meanwhile, represents a new form of cooperation between insurers and e-commerce players, offering unique lifestyle propositions through an innovative, customer-centric distribution model. “This unique and first-to-market partnership starts a new era of personal life insurance in Vietnam,” Mr. Besant said. “Together, united by a shared vision to deliver seamless health and protection to Vietnamese families, we will focus on three distinct areas: lifestyle benefits and innovative distribution, distinctive digital health and wellness offerings, and other financial and e-commerce propositions.”

It has also applied numerous measures to tackle the pandemic. “Investment in building a new advanced technological ecosystem that helps to simplify our activities, like online meetings and training and consultation, speaks for itself,” he added. “We are all aware that customers are changing their behavior rapidly, especially in the context of the pandemic and unrelenting technological advances.”

Prudential Vietnam also made timely adjustments to its operations in response to the pandemic, including applying flexible ways of working, optimizing costs, and enhancing digital transformation for all customer touchpoints to prioritize the health and wealth of customers and to contribute to the country’s economic development. The company has been focusing on improving digital and technology transformation in every step throughout the entire customer journey, including consultation, underwriting, and submitting claims, by applying advanced technologies. All of these make for a seamless customer experience to ensure their safety during the pandemic.

Moreover, Prudential Vietnam launched an online health check-up assessment service in July, helping customers connect directly with doctors for physical examinations and health assessments without making a physical visit to an affiliated hospital or clinic. It also introduced two other new features to help customers quickly complete claim and electronic identification (eKYC).

Promise remains 

Despite being confident about their recent business performance, foreign life insurers in Vietnam have become more unsure about their business prospects during this fourth Covid-19 outbreak. Only slightly more than half are optimistic about their business results in the second half, a significant decline from just over 90 per cent saying so last year, according to the Vietnam Report survey. Meanwhile, the number of insurers who think that business will be more difficult has increased sharply, from 4.8 to 35.3 per cent of respondents.

The survey also revealed that insurers are facing five major challenges: increasing competitiveness in the industry, risks caused by natural disasters and extreme weather conditions, pandemics, falling incomes in its customer base, and insurance fraud. But this does not mean that the door for growth opportunities is closed. It also indicates three growth drivers for the industry: people’s awareness and understanding of insurance is increasing, technology is being developed and applied to improve the insurance industry’s value chain, and insurance distribution channels are being diversified. 

In fact, in the recent Manulife Asia Care Survey, a remarkable nine out of ten (91 per cent) of Vietnamese respondents said they intend to take out a new insurance policy in the next six months; higher than anywhere else in the region. Protecting themselves and their families amid uncertain times is the main motivation. A significant majority of Vietnamese respondents (79 per cent) also say that retirement planning has become more important since Covid-19 began.

While the number of Vietnamese taking out insurance has grown significantly in recent years, the country remains largely under-insured, Mr. Lee said. “However, this presents a huge opportunity for insurers such as Manulife Vietnam to not only raise awareness around the value of insurance but also help protect even more people,” he said. “Ultimately, Vietnam’s life insurance industry is ripe for transformation, and this lends itself to potentially helping solve other wider societal challenges, such as closing the protection gap.”

Vietnam Report said that in the “new normal”, risk management - the core value of the insurance industry - will be different due to fundamental changes in perceptions and the behavior of economic agents. Covid-19 has increased the need for industry stakeholders to more widely engage with their customers. This is pushing a profound shift towards a holistic service approach focused on risk management and prevention. 

“Despite the difficulties and unpredictability of the pandemic, the efforts of the government, the rapid digital adaptation and transformation, and the constant improvements in the customer experience by businesses make me believe that the life insurance industry will continue to grow steadily,” Mr. Besant said. “Experiences with medical crises help heighten people’s awareness about risks, thus increasing the demand for insurance. We therefore expect the industry to continue to grow in the future.”