Non-life insurance: traditional channel remains strong

06-May-2021 Intellasia | Dau tu Chung khoan | 5:02 AM Print This Post

The Vietnam’s economy is forecasted to grow by 6.5 percent in 2021, leading to the expectation that the non-life insurance market will regain the high growth rate in the previous time with the main motivation from retail activities.

When the market recovers, in addition to retail products, the opportunities are also shared to other products such as construction, goods, technical asset insurance, etc. However, according to insurance companies, retail is still the fastest-growing segments which brings the highest proportion of revenue to non-life insurers thanks to the high proportion in the revenue structure.

According to statistics of the Department of Insurance Management and Supervision (Ministry of Finance), in 2020, motor vehicle insurance still accounted for the largest proportion in the total revenue of non-life insurance companies, reaching 31.9 percent (equivalent to 17.551 trillion dong), followed by health insurance with a proportion of 31.4 percent (equivalent to 17.322 trillion dong). Because of the large proportion and growth potential, most insurance companies consider retail as a key strategy in 2021, leading to the fierce competition in these segments, not only in product development, looking for partners to cooperate, but also in developing new sales channels.

Typically, at Military Bank Insurance Joint Stock Company (MIC), with the goal of continuing to promote insurance products for human health, digital products, products sold through bancassurance channel and new products for specialised market, MIC is ultimately looking for a strategic partner with a brand name and retail experience (direct, online, agent, distribution, etc.)

For Petrolimex Insurance Joint Stock Company (PJICO), in addition to programmes to boost sales through bancassurance, the company also plans to launch new projects with existing partners such as Vinfast, Boltech, FWD, Mioto, Shinhan Bank, Lotte Finance, Savico, MobiFone, etc. PJICO also plans to develop new sales methods through Petrolimex’s petroleum retail system and boost channel/ chain sales to gradually replace traditional retail, meeting the requirements of revenue growth and productivity increase, etc.

To expand distribution channels to individual customers, PetroVietnam Insurance Joint Stock Company (PVI Holdings) has signed a business cooperation agreement with VETC Vietnam Joint Stock Company and TC Advisors Joint Stock Company (TCA). According to PVI’s leaders, in the first quarter of 2021, more products for online sales channel were added and it is expected that in the second quarter, the company will continue to seek partners with strong e-commerce foundation to develop new products in order to further develop retail system.

For Post and Telecommunications Insurance Joint Stock Company (PTI), along with promoting the existing sales channels, particularly strong distribution channels such as bancassurance, VNPost, online sales channel, etc. PTI will also strengthen cooperation with major trading floors and reputable telecommunications companies to introduce and promote insurance products in the e-commerce environment.

“In Digital segment, PTI will build platforms to exploit businesses with big data such as Viettel, VinaPhone, Bank, Inso, etc. on Telco channel and develop in symbiotic direction (packaging insurance products into applications of partners such as Open99, Mai Linh online, Vinasun, Fastgo, etc.) and e-commerce platform on cyberMKT, etc.”, said PTI’s representative, adding that the company has determined to focus on retail development since 2014 to bring in a large and more stable source of revenue. This leader also said that with its strengths and experience in deploying large sales channel of post offices, PTI has set out a suitable orientation to maximise the effectiveness of the bancassurance channel. By 2020, the revenue through this channel accounted for more than 20 percent of PTI’s total revenue, becoming the distribution channel with the highest proportion.

Online insurance – the story in the future

In addition to bancassurance or agency, the two most fiercely competitive distribution channels at the present time, insurers have started to pay attention to new sales channels such as online sales, cooperating with Insurtech start-ups, e-commerce floors, etc. to increase the accessibility to customers, especially young customers.

Currently, compared to agency or bancassurance channels, the level of competition of online channel remains insignificant because its revenue is still modest. Nevertheless, with the inevitable development trend of e-commerce, this channel is expected to be a major distribution channel in the future which replaces traditional channels such as agency or bancassurance. Thus, insurance companies have early prepared to welcome opportunities in the future.

However, it is a fact that while medium-sized businesses such as MIC, VBI, etc. are focusing on activities in online market, except for PTI, other giants seem to not really pay attention to online sales channel.

According to insurance experts, the reason why big insurers have not focused on online sales channel alone because the larger the scale, the more investment needed in personnel, technology, products to suit the new channel. Not to mention, since the profit margin of the original insurance segment is getting narrower, it is necessary to consider adding a large amount of finance to “invest in the future”.

 

Category: Finance, Vietnam

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