The high inflation rate has forced people to tighten their belt and spend less money on insurance policies. This explains the modest business result of life insurers in the first six months of year: though the premiums from new insurance policies increased by 30 percent, and the number of new policies increased by six percent only.
“It is understandable why the growth rate in the number of insurance policies has decreased. However, the worrying thing is that the problem would continue in the last months of the year, if the high inflation cannot be controlled,” said Phung Dac Loc, Secretary General of the Vietnam Insurance Association.
Analysts have pointed out that if the high inflation lasts for a long time, the number of clients canceling insurance policies before the due time would keep rising. According to the Vietnam Insurance Association, the total returned value of the canceled insurance policies reached 1151 billion dong in the first six months of 2011.
“In the next three years, we may see many more insurance policies to be canceled, including the policies near the maturity,” the manager of an insurance company admitted.
“Of course, the cancellation of the policies would not cause big difficulties to insurers like the cancellation of the newly implemented policies,” he added.
Thoi bao Kinh te Vietnam has quoted an official of the Insurance Management Agency under the Ministry of Finance as saying that life insurers have been meeting big difficulties in looking for clients, while many clients who took insurance policies before, now cannot keep paying money to follow the policies. Meanwhile, new investors, both domestic and foreign, have become more cautious when considering their new investment plans in the Vietnamese insurance market.
As for life insurers, the last months of years are always considered the “golden season” because it is the easiest time for them to find out new clients. However, things prove to be quite different this year.
Life insurers said that they now have to make every effort to help insurance agents to bring new insurance policies. They said that it is now not the time to sit still and wait for agents to bring new policies, but it is the time to recruit new agents, provide training courses to help obtain new clients
“In the current difficult circumstances, life insurance companies themselves have to take actions and give insurance agents a helping hand to popularize the important role of life insurance in people’s lives,” said the Deputy General Director of a life insurance company.
In fact, the revenue of life insurers keeps rising with the total new premiums in the first six months of the year reaching 1990 billion dong, an increase of 28.9 percent over the same period of the last year. Meanwhile, the total insurance premium of the market was 7296 billion dong, up by 16.2 percent.
However, the number of new insurance policies was lower than that of the same period of the last year. This has been explained by the fact that some big insurance policies have been sold, while the number of clients did not increase.
Statistics show that the average annual insurance premium of Manulife Vietnam is 7-8 million dong per contract, while the figure is 5-6 million dollars for Prudential and AIA Vietnam.
In principle, newly established insurance companies always have higher numbers of newly taken insurance policies. However, this did not come true in the first months of the year, which shows that the difficulties of the national economy have had big impacts on the insurance market.
Life insurers these days continue recruiting new agents in an effort to seek more contracts. According to the Vietnam Insurance Association, by the end of June 2011, Vietnam had had 178,540 agents, an increase of 21.5 percent over the same period of the last year.
Prudential proves to have the highest number of agents (89,907), while Bao Viet Life has 23,355, and Dai-ichi Life Vietnam has 15,201. In the first six months of the year alone, 62,864 agents were recruited.
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