am the best maintains its stable market segment outlook for Vietnam’s non-life insurance segment, citing market growth supported by economic tailwinds, regulatory developments expected to drive growth and rising domestic interest rates which should benefit investment returns.
In a new one Market segment report by Best, “Market Segment Outlook: Vietnam Non-Life Insurance,” AM Best notes that non-life insurance premiums have recovered strongly in the first half of 2022, with year-on-year growth of 13.6%, according to market statistics. The expected growth should be supported by structural economic tailwinds, which will continue to benefit the economy. Vietnam could also benefit from “friendshoring,” a recent trend in which companies seek to mitigate supply chain risk by diversifying some of their raw material sources, manufacturing or logistics capabilities to countries with shared values.
In addition, a new insurance industry law coming into force in early 2023 may, over time, lead to increased participation by foreign players and potentially increased market competition. AM Best sees the associated benefits of increased foreign participation, including knowledge transfer, healthy competition and additional financial flexibility, as outweighing the risks.
“These regulatory changes should strengthen the market’s financial resilience and promote risk transparency as it matures,” said Chris Lim, senior financial analyst at AM Best. “Vietnamese insurers may need to manage transition risks arising from this development, and it may Put pressure on companies to ensure adequate risk management or actuarial talent to meet the new requirements.”
According to the report, non-life insurers in Vietnam should benefit from rising domestic interest rates, which will support investment returns. Although economic growth and the recovery from the pandemic have been supported by low interest rates, the country’s central bank has signaled its intention…
