KUALA LUMPUR, Nov 28 (Bernama) -- Global credit rating agency AM Best has maintained a stable market outlook on Vietnam’s non-life insurance segment, citing premium growth and regulatory enhancements that strengthen risk management and corporate governance.
In its latest Best’s Market Segment Report, “Market Segment Outlook: Vietnam Non-Life Insurance”, the rating agency notes the government’s relaxation of restrictions on foreign investment in Vietnam’s insurance industry as a positive factor.
AM Best is of the view that this will be a favourable development over the long term; in particular, smaller local players can leverage foreign investors’ experience and expertise to refine their underwriting capability and business strategies.
In a statement, its senior financial analyst, Ken Lau said Vietnam’s non-life insurance market will likely resume its growth momentum as global demand recovers and benefits the domestic economy.
“Vietnam is likely to remain an attractive destination of foreign direct investment on account of the government’s pro-business stance and its position as an alternative for companies seeking to diversify their supply chain operations away from China,” he said.
Vietnam’s non-life gross written premiums grew year over year by 1.3 per cent in the first half of 2023 to 34.9 trillion Vietnamese dong (US$1.4 billion) despite a slowdown in economic growth and issues associated with mis-selling of bancassurance products. (US$1=RM4.67)
The inadequacy of management and supervision of service quality and products sold via the bancassurance channel resulted in heightened regulatory scrutiny and oversight of bancassurance deals by the Ministry of Finance and led to lacklustre growth for some market players, as well as indirectly slowed down growth in individual lines of insurance.
The report notes that the promulgation of the new Insurance Business Law at the start of 2023 will strengthen risk management standards of Vietnam’s non-life insurers, thus enhancing the attractiveness of the market to foreign investors.
At the same time, the cost of compliance will increase for insurers and may become onerous for smaller carriers. The increased regulatory scrutiny on bancassurance is essential for restoring consumer confidence in insurance, following numerous complaints from policyholders about shortcomings and inadequacies in service.
-- BERNAMA
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