Vietnam's VNPT Inks Deal With France's Prevoir Insurance Co.
HANOI - The Vietnam's largest telecom company - Vietnam Posts and Telecommunications Corporation (VNPT) - has entered the lucrative insurance market following partnership signed on September 13 with France's Prevoir Vietnam Life Insurance company. Under the deal between the two companies, the State-owned VNPT will exclusively distribute life insurance products developed by Prevoir Vietnam via its network of post offices across the country for the next 10 years.
The service, designed to create greater access for people to life insurance products in order to help them build up savings plans and protect their family from financial risk, will be available from early next year.
The partnership between the two companies is an unprecedented move in the country's life insurance market where other insurance service providers utilise agents to increase premium buying.
Prevoir Vietnam acting CEO Tran Ba Phuoc explained: "VNPT has a strong service distribution network with more than 3,000 post offices in 64 provinces. It also has a successful track record in providing a postal savings service."
According to the company, its life insurance products are designed to be simple and flexible in selecting payments, premium payment terms and sum insured.
The VNPT's deputy general director Hoang Tho Thai said that the partnership deal in the insurance sector reflected the company's business diversification as part of its transformation into an economic group.
In the first half of this year, the national insurance industry earned a turnover of VND8 trillion ($506 million), an increase of 18 per cent compared with the same period last year, according to the industry's statistics.
By the end of this year, the industry's turnover is expected to hit VND17 trillion (over $1.06 billion), accounting for 2.5 per cent of GDP.
Prevoir Vietnam was established in March this year as a 100 per cent foreign invested company with a registered capital of US$10 million.
Vietnam News Agency - September 15, 2005.
Insurance market potential yet to be developed in Vietnam
HANOI - Though the insurance industry in Vietnam has been growing rapidly in recent years, just eight per cent of the country's population is actually insured, indicating the untapped potential may be huge, says an industry insider.
However, people have remained deeply conservative, choosing to park their savings in a few "safe" assets like gold and land or in banks. To overcome this reticence, Trinh Quang Tuyen, president of the Vietnam Insurance Association (VIA), said insurance companies needed to become more competitive.
"In spite of its rapid growth, the insuring industry is still skewed. The focus is on profitable areas while the more 'thorny' ones are ignored," Tuyen said.
Premium incomes have grown at 30 per cent annually for the last 10 years.
The General Statistics Office said savings last year alone amounted to VND112 trillion (US$7.1 billion) with investments in banks, the insurance stock market, and others accounting for VND70 trillion ($4.4 billion). This meant VND42 trillion ($2.6 billion) was lying idle with the public.
Domestic insurance companies have grown at consistently high rates and held a large market share.
Life insurance witnesses the fastest growth, followed by health insurance and accident insurance. Insurance premiums as a proportion of GDP climbed to 2 per cent in 2004 from a mere 0.37 per cent over a decade ago. The industry offers around 600 products to clients.
But to attract the huge amount of money lying untapped, the industry association is calling on businesses to diversify means of ownership. For a long time, all insurance in Vietnam was State-controlled.
It has also asked enterprises to enter all four main areas of insurance, namely, life insurance, non-life insurance, re-insurance, and intermediary insurance.
Vietnam News Agency - September 14, 2005.
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