HÀ NỘI — Insurers have become more cautious about their business prospects in the second half of the year according to a survey conducted by the Việt Nam Report (VNR).
In Việt Nam, following the growth momentum of 2020, 75 per cent of insurance enterprises participating in VNR's survey recorded positive results in 2021.
In the fourth wave of the COVID-19 outbreak, however, insurers have become more cautious about their business prospects. Only slightly more than half are optimistic about their business results in the second half of the year, a significant reduction from just over the 90 per cent recorded last year.
Meanwhile, the number of insurers who think that business would be more difficult has increased sharply from 4.8 to 35.3 per cent of respondents.
The VNR survey showed that insurers are facing five big challenges including: increasing competitiveness in the industry, risks caused by natural disasters and extreme weather conditions, pandemics, decreased income of its client base, and insurance fraud.
According to the General Statistics Office, about 22.2 million workers lost income due to the impact of COVID-19 in 2020. In the first quarter of 2021 alone, this number reached 6.5 million people, approximately one-third of 2020’s whole year figure.
However, this does not mean that the door for growth opportunities is closed.
VNR's survey indicates three growth drivers for the industry. These include: people's awareness and understanding of insurance increasing; technology being developed and applied to improve the insurance industry’s value chain; and the diversification of insurance distribution channels.
Awareness of and about insurance has been a big contributor in growth in the industry, according to 70.6 per cent of surveyed enterprises, a sharp increase from 61.9 per cent in 2020.
It’s believed that this has been driven by COVID-19 pandemic, which has brought to the fore the vulnerability of people’s personal finances.
That said, the insurance penetration rate/GDP in the country is still relatively low.
In 2020, Việt Nam had 11 per cent of the population participating in life insurance, with the average insurance premium-to-GDP ratio up by 3 percent. With this momentum, by 2025, it is estimated that 15 per cent of the population will participate in life insurance generating an expected revenue of 3.5 per cent of GDP.
VNR said in the next normal period, risk management - the core value of the insurance industry - will be different due to fundamental changes in perceptions and behaviours of economic agents.
COVID-19 has increased the need for industry stakeholders to more greatly engage with their customers. This is creating a profound shift towards a holistic service approach focused on risk management and prevention. — VNS
