Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Korean insurance companies seek new growth engine in Vietnam
NH Property & Casualty (P&C) Insurance CEO Choi Mun-seob, left, stands next to Duong Thanh Danh Francois, chairman of PVI Insurance, during an MOU signing ceremony in Seoul, Tuesday. Courtesy of NH P&C
By Anna J. Park
Insurance market in Vietnam posts 20 percent growth annually
By Anna J. Park
Faced with the limitations of an aging and shrinking population, Korean insurers are looking to the Vietnamese market and its population of nearly 100 million for expansion.
Currently, seven Korean insurance companies ― Hanwha Life, Mirae Asset Life, Shinhan Life, Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, KB Insurance and Seoul Guarantee Insurance ― are operating either subsidiaries or as branches in Vietnam.
Some insurance companies, yet to establish local branches in Vietnam, have instead decided to strengthen partnerships with Vietnamese insurers, seeing the potential for overseas expansion in the Southeast Asian country.
NH Property & Casualty (P&C) Insurance signed a memorandum of understanding (MOU) with PVI Insurance, a Vietnamese non-life insurance company, earlier this week, the aim of which was to strengthen the partnership and expand reinsurance, business cooperation and networking between the two firms. PVI Insurance enjoys the largest market share among non-life insurers in Vietnam.
“NongHyup is strengthening business cooperation with Vietnam, which is rising as one of the largest markets in Southeast Asia. NH P&C will continue to pioneer a new market by enhancing mutual cooperation with PVI Insurance,” NH P&C CEO Choi Mun-seob explained.
DB Insurance has opted to make active investments in Vietnamese insurers, instead of establishing a direct affiliate in the country. The company has recently acquired a 75 percent stake in Saigon-Hanoi Insurance Corporation (BSH), the ninth non-life insurer in the Southeast Asian country. It is DB Insurance's third acquisition of Vietnamese non-life insurers since it first acquired a 37.2 percent stake in Post and Telecommunication Joint Stock Insurance back in 2015 and a 75 percent stake acquisition of Vietnam National Aviation Insurance in February this year.
“DB Insurance has long been seeking a global growth strategy in order to overcome the limits borne by the local insurance market due to a declining population as well as saturation of the domestic market,” an official from DB Insurance said. “Considering Vietnam's high economic growth, young population, as well as accessibility to other neighboring countries in the Indochinese Peninsula, the country is deemed as a top priority market in the Southeast Asian region.”
Industry watchers say Kyobo Life and KB Life are also likely to make a foray into the Vietnamese market. What attracts Korean insurers to the Southeast Asian country is its ample growth potential. According to the Korea Insurance Research Institute (KIRI), Vietnam's insurance market has been posting an average of 20 percent growth annually, and the country still shows a low level of insurance penetration.
The country's insurance companies' annual average increase rate of premium incomes stood at 20.8 percent from 2015 to 2021. In 2021 alone, the aggregated amount of premium incomes in the country was around 11.9 trillion won ($9.1 billion), a 16.8 percent jump from the previous year.
In addition, Vietnam's insurance penetration rate, the ratio of premiums underwritten in a particular year to GDP, stands at 2.1 percent for life insurance and 0.6 percent for non-life insurance, indicating huge growth potential.