|Customers ask for information about insurance products at Bao Viet Life Co's HCM City branch. Most insurers ensured financial safety in 2014. — VNA/VNS Photo Tran Viet
HA NOI (VNS) — Forty-three of the country's forty-five insurance companies ensured financial safety in 2014, according to a report by the Ministry of Finance (MoF) reviewing insurance market restructuring over the past year.
Eight non-life insurance companies and 16 life insurance companies were listed in Group 1, which consists of insurance businesses that ensure payment capacity and operate effectively with stable profits.
Nineteen non-life insurance companies were listed in Group 2, which consists of companies that can still ensure payment capacity but face difficulties in operation on the back of high operating and indemnity costs or fail to make a profit for two continuous years.
Two non-life insurance companies, Xuan Thanh Insurance Joint Stock Corporation and Vien Dong Insurance Joint Stock Co, were listed in Group 3, which consists of firms at risk of insolvency. Both received direct restructuring instructions from the Ministry of Finance's Insurance Supervisory Authority (ISA).
No companies were listed in Group 4, which consists of companies unable to restore their liquidity and placed under special control.
Last year was successful for the insurance sector with premiums totalling VND52.7 trillion (US$2.47 billion), a year-on-year increase of 14.2 per cent. Life insurance companies accounted for around VND27 trillion ($1.27 billion) of those premiums, an increase of 18 per cent compared to 2013, while non-life insurance companies accounted for around VND25 trillion ($1.18 billion), increasing by 10.5 per cent.
Despite economic difficulties, four non-life insurance companies raised their charter capital by VND662 billion ($31.1 million), and three life insurance companies raised their charter capital by nearly VND1.4 trillion ($65.8 million). In addition, four non-life insurance companies received approval to raise their charter capital by VND832 billion ($39.1 million) and one life insurance company received approval to raise its charter capital by VND90 billion ($4.23 million).
In 2014, several restructuring measures were implemented in accordance with Decision 1826/QD-TTg. They included enhancing insurance companies' financial safety levels and investment efficiency, increasing insurance business activities, implementing management and governance activities and improving insurance product quality.
The Prime Minister issued the Decision on December 6, 2012 as part of a scheme on restructuring the securities market and insurance companies.
The MoF instructed insurance companies to develop activities in potential markets and improve customer service and business efficiency. The ministry also encouraged companies to introduce new products in order to meet customers' diversified demands, contributing to achieve the national goal of socio-economic development and social security.
Back Jong Kook, General Director of Hanwha Life Vietnam, told Securities Investment newspaper that there were three reasons to be optimistic about the insurance sector this year: the growing middle class, the Vietnamese government's preferential tax polices and more diversified and high-quality insurance products.
The ISA forecasts that the insurance market will attain a two-digit growth rate this year. Premiums are expected to reach VND59.3 trillion ($2.79 billion), increasing by 12.6 per cent from 2014. Premiums for non-life insurance are expected to increase by 10 per cent and life insurance by 15 per cent.
The restructuring process for insurance companies this year will focus on creating policies and regulations, according to the ISA. The MoF will promulgate circulars instructing implementation of micro insurance products, as well as complete and propose to the Government those related to construction insurance. — VNS