The Vietnamese general insurance industry is set to grow at a compound annual growth rate (CAGR) of 6.7% from VND 71.1 trillion ($3.0 billion) in 2023 to VND 98.3 trillion ($3.9 billion) in 2028, in terms of gross written premiums (GWP), forecasts GlobalData, a leading data and analytics company.

GlobalData’s Insurance Database reveals that the general insurance industry in Vietnam is expected to grow by 2.4% in 2023 and 5% in 2024, supported by favorable regulatory reforms, rising demand for natural catastrophic (Nat-cat) insurance due to climate change, and a post-COVID-19 rise in the demand of health insurance.

Swetansha Chauhan, Insurance Analyst at GlobalData, comments: “After experiencing a significant growth of 17.5% in 2022, the general insurance industry is projected to achieve slower growth in 2023 due to a slowdown in Vietnam’s economy, which is expected to impact all major general insurance lines. However, the general insurance growth is expected to revive from 2024 onwards with a revival in the global economy and easing inflation levels.”

Personal Accident and Health (PA&H) insurance is the leading line of business, accounting for a 35.0% share, in terms of GWP, in 2023. PA&H insurance grew by 3.2% in 2023, primarily driven by increasing health awareness after the pandemic and changing demographics, which include an increasing life expectancy and a rapidly aging population. According to the United Nations Population Fund (UNFPA), as of 2023, 10% of the population was aged 65 years and above, which is supporting the demand for health insurance.

Chauhan adds: “The increasing cost of medical treatments, driven by a high demand for quality healthcare and rising inflation, has led to an increase in the premium prices for health insurance policies. Also, concerns about declining public health infrastructure, with long waiting periods and limited coverage have led people to move towards private health insurance, which will support PA&H insurance growth. PA&H insurance is expected to grow at a CAGR of 7.5% during 2023-28.”

Property Insurance is the second largest segment, estimated to account for 25.6% share of general insurance GWP in 2023. Property insurance is expected to grow by 3.2% in 2023, driven by the increasing demand for nat-cat insurance policies due to frequent extreme weather events. According to the National Steering Committee for Natural Disaster Prevention and Control, Vietnam witnessed 1,100 natural disasters in 2023, causing an economic loss of VND8.23 trillion.

Additionally, the Vietnamese construction sector is expected to grow by 11.4% in 2024, supported by the government’s efforts to upgrade the country’s rail, road, and other public transport infrastructure, which will support property insurance growth. Property insurance is expected to grow at a CAGR of 7.39% during 2023-28.

Motor insurance is the third largest line, estimated to account for a 25.2% share of general insurance GWP in 2023. The motor insurance market in Vietnam experienced a 2% decline in 2023, attributed to a decline in vehicle sales. According to the Vietnam Automobile Manufacturers’ Association (VAMA), vehicle sales witnessed a 25% decline in 2023, as compared to the previous year.

In November 2023, Vietnam joined the ASEAN Compulsory Motor Insurance System (ACMI), which requires motor vehicle owners from other ASEAN member states transiting or traveling to Vietnam to register for compulsory third-party liability insurance. The move will support the demand for motor insurance in Vietnam.

Liability, Financial lines, Marine, aviation, and transit (MAT), and Miscellaneous insurance accounted for the remaining 14.2% of the general insurance GWP in 2023.

Swetansha concludes: “The general insurance industry in Vietnam is expected to regain its growth momentum in 2024, propelled by the global economic recovery. A stable socio-political environment, changing demographics, and increased health awareness due to the pandemic will support general insurance growth in Vietnam over the next five years.”