Insurance industry facing difficulties in Q3, with growth opportunities from 2023

The revised Law on Insurance Business, expected to be promulgated in 2022 and be effective from July 1, 2023, will open up many new business opportunities for market participants, especially in the field of life insurance and health insurance.

In its recent insurance industry update, Viet Dragon Securities (VDSC) said that, in the context of strict and prolonged social distancing from mid-July until now, insurance sales are likely to slow again in the third quarter.
Strict social distancing measures may lead to lower insurance revenue, both life and non-life, in the quarter. Reasons include limited or suspended business production, which could result in lower demand for insurance.

Experts have predicted that the recovery will begin in the fourth quarter as higher vaccination rates allow for the reopening of economic activities.
VDSC believes that investment-linked insurance will lead to growth in life insurance premiums. Meanwhile, health insurance will be the main growth driver of non-life insurance, boosted by people’s improved awareness of unexpected health risks.

SSI Securities, in its insurance industry report, said that the revised draft law allows insurance companies to be more autonomous in their business operations, with regulators not allowed to overly interfere in their operations. The draft also amends regulations on solvency and intervention when the capital adequacy ratio (CAR) falls to a certain level. However, the draft prohibits insurance companies from engaging in the real estate business, with certain exceptions, including property that is used as a workplace.

Overall, SSI Research believes that the draft law is a positive step for the long-term development of the insurance industry, while VDSC believes that it will open up many new business opportunities. Moreover, the regulations have a transition period between 2023 and 2027, providing a buffer period to curtail any sudden changes in the industry.