KUALA LUMPUR: Global credit rating agency, AM Best has maintained a stable outlook on Vietnam’s non-life insurance segment, citing accelerating non-life premium growth and increased demand for commercial lines insurance.
In its latest Best’s Market Segment Report, ‘Market Segment Outlook: Vietnam Non-Life Insurance’, the rating agency notes the country’s Insurance Business Law as a recent regulatory reference supporting the stable outlook, as the newly adopted requirements on risk management, internal controls, internal audits and actuarial standards are expected to enhance risk governance and strengthen financial conduct.
Property insurance was a key business growth driver in 2023, in which government spending on renewable energy, transportation, and other large-scale infrastructure projects are likely to drive greater demand for insurance coverage going forward.
Vietnam’s non-life insurance market growth also should continue to benefit from the country’s reputation as an attractive destination for foreign direct investment (FDI).
AM Best Senior Financial Analyst, Ken Lau said FDI inflows are expected to continue as one of the growth engines of the country’s economy, which in turn will bolster demand for commercial lines insurance.
“Vietnam remains a magnet for FDI, as investors continue to seek global supply chain diversification,” he said in a statement.
At the same time, market competition has eroded the underwriting profit margins of the motor and health insurance segments, owing partly to looser underwriting. Near-term pricing competition in these lines could constrain technical margins.
The non-life insurance industry’s earnings also may be dampened by lower investment yields over the near term.
The State Bank of Vietnam lowered the policy interest rate multiple times in the first half of last year and is expected to maintain an accommodative monetary policy stance over 2024.
— BERNAMA
