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| Non-life insurers post losses from main business field |
| 08/Feb/2010 Intellasia | Dau Tu Chung Khoan page 27 |
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| 8 Feb, 2010 - 11:38:23 AM |
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Ending 2009, non-life insurance firms had to face business loss totalling around 163 billion dong. Up to 18 of 26 posted losses in major business fields, and 21 of 26 firms earned profit from financial investment.
According to Insurance Supervision Management Department, the insurance market last year witnessed a sustainable growth with a ratio of premium and GDP estimated at 2.3 percent. Total insurance premium of 2009 reached 24.681 trillion dong, in which the turnover from non-life insurance accounted for 13.250 trillion dong, up 21 percent year-on-year. Bao Viet insurer continued taking the lead in Vietnam's non-life insurance market with the market share of 30.4 percent, PVI 20.6 percent, Bao Minh 17.1 percent and PJICO 9.7 percent. The revenue from investment activities of insurance firms brought in 6.016 trillion dong, including 1.350 trillion dong made by non-life insurers and 4.666 trillion dong contributed by life insurers (growing by 17 percent against 2008). Ministry of Finance is shaping the profit structure of these insurance companies. However, initial statistics showed that most enterprises could not profit from major business speciation.
Ton Lam Tung, vice director of Bidv Insurance Co (BIC) said that till the end of 2009, its total premium gained 548.99 billion dong, a year-on-year rise of 50 percent. Its revenue from insurance business surpassed the threshold of 402 billion dong, soaring 36 percent from 2008 while that from financial investment contributed 146 billion dong, jumping 107 percent and the pre-tax profit achieved 81.25 billion dong. Last year BIC kept leading the sixth position among 28 non-life insurers in terms of market share but the insurance business still saw losses because of the big compensation for floods and disasters in central region (Storm No 9 and 11) beyond the companies' forecast and the loss in insurance business was offset by financial investments.
Tung added that BIC last year expanded market share thanks to the provision of insurance services to enterprises in southern industrial zones.
Factually, the losses in main business of many insurers came from the race of lowering insurance fees and expanding the requirements of insurance contracts.
A leader of non-life insurance firm said that his firm targets to reduce the annual compensation ratio by 4 percent. Therefore, with the compensation ratio of 60 percent of total premium in 2007, the company will have to spend few years to withdraw capital. If the ratio is over 50 percent, the company's business could not bring in profit.
Phung Dac Loc, general Secretary of Vietnam Insurance Association, said that business loss of insurance firms could not be treated in 1-2 years while the money deduction for risk compensation fund has not been implemented in line with current regulations seriously. Competition through lowering insurance fees along with increasing risks will be continued in 2010, he predicted.
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