Vietnam's insurance premium revenue declines in 2024 for second consecutive year 

The Vietnamese insurance market's premium revenue in 2024 has continued to decline for the second consecutive year, though the rate of decline slowed down compared to 2023.

A report from the Insurance Supervisory Authority shows that in 2024, insurance premium revenue has yet to recover, with an estimated total of VND227,495 billion ($8.93 billion), a 0.26% drop from the same period last year.

Non-life insurance premium hit around VND78,291 billion ($3.07 billion), up 10.21% year-over-year, while life insurance revenue was estimated at VND149,204 billion ($5.86 billion), a 5% decline.

The insurance market has shown slow recovery, but there are positive signs as the decline rate has eased compared to 2023. In 2023, total market premium revenue dropped by 8.33%, the first decline after a decade of consistent growth.

The insurance market assets this year surpassed VND1,000 trillion ($39.28 bilion), a 10.88% increase from 2023. Of this, life insurance companies accounted for over 86%, with an estimated total of VND861,788 billion ($33.85 billion).

Total equity of insurance companies rose by 6.45% to an estimated VND210,124 billion ($8.25 billion). Companies reinvested over VND850,000 billion ($33.39 billion) into the economy, reflecting a 13.17% increase year-over-year.

Insurance benefit payouts rose nearly 18%, reaching an estimated VND93,900 billion ($3.68 billion). This includes VND22,519 billion ($884.7 million) paid by non-life insurance companies and VND71,387 billion ($2.8 billion) from life insurance companies.

The revenue decline has been attributed to economic difficulties and shortcomings in sales consulting over the past two years. In particular, disputes surrounding the sale of insurance products through banks have undermined consumer confidence and influenced purchasing decisions.

The life insurance segment, traditionally the primary growth driver of the market, has been the most affected. This segment typically growed 2-3 times faster than non-life insurance, with an average growth rate exceeding 30% during the periods when banks actively promoted bancassurance.

Bancassurance has emerged as a crucial distribution channel, accounting for nearly 50% of new revenue, surpassing traditional agency channels.

Over the past two years, the life insurance segment has faced significant changes. The implementation of the Insurance Business Law in early 2023 and Circular 67 introduced stricter regulations to protect insurance participants' rights.

Banks are now prohibited from selling investment-linked insurance 60 days before and after loan disbursement. Additionally, consultants are required to record their consultations (audio and video), and the certification process for unit-linked products has become more rigorous, leading to lower passing rates.

The State Bank of Vietnam is also drafting Decree 88, which imposes administrative sanctions for violations in the banking and monetary sectors. Under this draft, banks that tie non-mandatory insurance products to banking services could face fines ranging from VND400-500 million ($19,640).

Leaders within the life insurance sector acknowledge the need for market purification to ensure sustainable development, with more professional, well-trained insurance consultants.

Currently, the insurance market comprises 85 businesses, including 19 life insurance companies. Of the 19, two are domestic companies, Bao Viet and Bao Minh, and the rest are foreign or joint-venture entities.

Over the past two years, 10 life insurance companies, which generate nearly 97% of their premium revenue through the bancassurance channel, have been inspected. Of these, five investigations have been completed by regulatory authorities.

At a conference last weekend, leaders from the Ministry of Finance acknowledged that 2025 is expected to remain a challenging year for the economy and the insurance sector. However, they noted optimism that the insurance market could achieve growth in scale and quality, supported by strong macroeconomic fundamentals, strategic direction, and a revised legal framework.