The growth rate of Vietnam's general insurance market is forecast to plummet by three-quarters this year as a result of the economic slowdown caused by the COVID-19 pandemic.
Analytics firm GlobalData said that it expects the Vietnam's general insurance industry to grow by 3.4% in 2020, down from the 13.6% of growth registered in 2019.
Motor insurers – which accounted for over 30% of general insurance premiums in 2019 – are expected to be hardest hit after new car sales declined by 22% between January and September, in comparison to last year.
Overall, the researchers anticipate that Vietnam's general insurance business will experience a compound annual growth rate of 6.6% from 2019-2024, compared to 13.7% between 2015 and 2019.
“Sluggish economic growth in 2020 due to COVID-19 will adversely affect the general insurance business outlook,” said Sangharsan Biswas, insurance analyst at GlobalData.
“Slowdown in external trade activities, decline in tourist arrivals coupled with recent incidences of floods and typhoons in the country are expected to limit economic growth, resulting in lower premiums earnings.”
An impact similar to the one experience by motor insurers is visible in the marine, aviation and transit insurance business line, which accounted for 10.8% of the general insurance premiums in 2019.
Despite a surge in exports between September and October, supply chain disruptions in the first half of 2020 and weak economic conditions of major trading partners such as China, the US and Japan are expected to bring down premium earnings by 3.3%.
However, health insurance, which accounted for one-third of the general insurance business in 2019, is expected to increase due to growing consumer awareness, which could partially insulate the impact of slowdowns in other business lines.
“The current economic uncertainty, combined with the risk of the further spread of COVID-19 post the resumption of business activities, is expected to limit the growth of Vietnam’s general insurance,” Biswas added.
Image credit: iStock
Author: Chris Seekings