With COVID-19 restricting travel, tourism and international trade, several insurers in Vietnam have lowered their profit targets as they are finding it harder to sell non-life insurance policies.
According to a report from online publication VnExpress, during their 2020 annual general meetings that took place last month these insurers cited the pandemic as the main reason for falling non-life insurance sales.
The insurers said that while the wholesale aviation, tourism and cargo insurance sectors have always been slower than retailing general insurance, the pandemic has made this segment even harder.
“Insurance is an industry that inherently follows the performance of others, so it has been seriously affected by the pandemic. Flights, tours and transportation have stagnated, exports and imports have fallen, resulting in a large number of unsellable general insurance products,” said Bao Viet Group director Do Truong Minh.
Bao Viet Group, one of Vietnam’s largest insurers, predicts that revenue will fall 5% year-on-year by the end of this year after taking fee payments from insurance contracts entered into before this year into account.
Meanwhile, Pjico Insurance, a subsidiary of state-owned petroleum distributor Petrolimex, also stated that the decrease in petrol consumption due to low demand for transportation along with record-low gasoline prices during the pandemic have affected their petroleum goods insurance revenue adversely.
With the coronavirus pandemic under control in the second quarter and petrol prices climbing gradually, the insurer estimates that income from petroleum goods insurance would fall short of their target by 20%
At the same time, insurers also mentioned that other types of wholesale insurance such as property, technical and project insurance have seen poor growth with dwindling international investment.
Bao Minh Insurance also said that it had entered into fewer new insurance contracts this year, while many existing customers had asked to cancel insurance covers or defer fee payment as a result of business difficulties. It therefore expects revenues and profits to decrease by around 15% year-on-year.
Prior to the coronavirus pandemic, the Insurance Supervisory Authority had predicted that the growth figure for the insurance sector in 2020 would be 13.3% year-on-year. Securities firms had cited high economic growth, increasing income per capita, aging population and increasing hospital fees as main drivers for the sector’s growth.