~ Le Viêt Nam, aujourd'hui. ~
The Vietnam News

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Vietnam's life insurance market a potential goldmine

Vietnam's accession to the World Trade Organisation (WTO) in 2006 and steady recorded economic growth rates hovering around eight percent, have foreign insurance multi nationals eying the market.

Under Vietnam’s WTO commitments foreign insurers have the right to open branch offices within the country and are permitted to offer a plethora of non-life insurance options after 5 years in operation. To date only 6.5 million people out of the country’s population of over 84 million own life insurance and we believe due to this, Vietnam’s life insurance market is set to be a boon for foreign insurers, said David L Fried, regional director of the HSBC Insurance (Asia-Pacific). Keen to tap into the future potential of what is seen as a young market, big global players such as Daiichi Life Insurance Company of Japan and the Hong Kong and Shanghai Banking Corporation (HSBC) have already opened representative offices in the country.

In a bid to increase their profile within the domestic marketplace, foreign companies are coming up with novel ways to introduce new services to attract customers. UK based Prudential have begun to offer an educational insurance package that insures a family's breadwinner, in the event of death or illness the children of the family's principle will have their educational development provided for by the company. With new foreign firms entering the market, there has been fierce competition amongst insurers, said Phung Dac Loc, General Secretary of the Vietnam Insurance Association. Competition will be further heightened if the Ministry of Finance gives the go ahead for a new product that links insurance, savings and investment, he noted.

Vietnam's insurance industry has been running hot since the start of the millennium with a growth rate of 29% a year on average. Revenues from insurance have accounted for two per cent of the country's gross domestic product (GDP). Observers highlight the need to further open up the industry by pointing to the VND110 trillion (US $6.87 billion) insurance has pumped into the country's economic development since 2001.

Vietnam News Agency - May 2, 2007.