Life insurers still hesitant to enter financial market

Life insurance companies operating in Vietnam have full capacity of finance as well as human resources and required materials to establish fund management companies.

Inspite of this companies said that they will prefer to wait for additional one to two years.

Companies said that they are hesitant to enter the field as they are worried over incomplete legal framework and also the market does not seem to be prepared for it as of now.

“A problem raised is whether we should apply for establishing fund management companies right now or not because if we establish joint ventures, after one to two years when the WTO commitments become effective, will fund management joint ventures have to say goodbye? Other life insurers also surely have to think about this,” said a general director of a life insurance company.

In addition, there are some reasons that make businesses hesitant to establish fund management companies when there have not been any statute on open-ended funds. However, incompletion of the legal framework is only a minor reason; businesses are concerned about the time to enter the market.

However, not until 2011, will insurers apply for opening fund management companies. Such companies that plan to enter the market have been hastily making preparations for both human resources and materials while waiting for good time to enter the market. This is also the necessary time for parent companies to understand distinct features of the financial market when they decide to make investment here.

“I think that life insurers operating in Vietnam have sufficient capacity of finance, human resources and materials to establish fund management companies. However, it is true that the current context has not been really suitable for them to enter the market,” said an expert.

Currently, life insurance companies are promoting investment linked insurance products, a precedent to set up fund management companies. In fact, among the increased newly issued insurance policies of 13 percent against last year, investment insurance products reported the highest growth, 78 percent, followed by death insurance policies with the growth rate of 20 percent.

This shows that investment insurance is attracting great attention of clients and life insurance agents.

 

Category: Finance