Vietnam Insurance Report Q1 2008

This report differs from its predecessors in that it includes BMI's Insurance Business Environment Rating (IBER). The rating brings together a number of pieces of relevant quantitative data, together with BMI's Country Risk Rating (CRR). It is now much easier to consider the business environment for the insurance sector in any one country relative to the business environment for other industries in that country that are surveyed by BMI, and the business environment for the insurance sector in other countries.

Vietnam's IBER is 45.2. Relative to other countries in the Asia Pacific region, it is not an especially attractive insurance market for foreign insurers. The economic outlook is for continued growth.

Government policies are likely to remain constant over the long-term, particularly as regards the entrance of foreign players, although there is the potential for inflation. The IBER is held back by the underdevelopment of the non-life segment in particular, and the low GDP per capita.

Over the forecast period, we anticipate that non-life premiums will grow by 24% annually in local currency terms and by 25% in US dollar terms. Life premiums are expected to increase by 20% annually in local currency terms and by 21% in US dollar terms.

The competitive landscape in Vietnam, in both the non-life and the life segment, is concentrated. Both segments are open to participation by foreign groups, although foreigners are more important in the nonlife than in the life segment. The foreign presence, particularly in the life segment, remains small.

Vietnam's life and non-life segment are expected to continue their high annual rates of growth, in line with anticipated general economic growth. However, this growth will be coming off a small base.

The main weakness of Vietnam's insurance sector at the moment lies in broader economic conditions; namely, the tiny GDP per capita and the ongoing threat of high inflation.