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. Last Updated: 07/27/2016

Insurer Pitches Life in Vietnam Market

HANOI -- For a country that has suffered its fair share of deadly natural disasters and war, Vietnam has been slow to catch on to the idea of insuring human lives. Baoviet Life is betting that will change.


Vietnam's only life insurer, Baoviet Life, has loosed a team of 30 smartly dressed sales executives, armed with a life-insurance sales pitch on the Vietnamese capital.


They ply the young company's five-year and 10-year endowment policies and saving schemes for children's educations. By the end of this year, they should have term life, income insurance and whole life polices to offer as well.


"The market for life insurance has very strong potential," says Nguyen Thi Nai, deputy director of the five-month-old company, a subsidiary of the state-run insurer Bao Viet. "The life insurance market will follow the country's economic growth, and we have had a lot of that."


Until the communist government's decade-old drive for reform along market lines began to be felt in the early 1990s, the concept of insurance was little understood among Vietnam's largely rural-based and low-income population.


Even today, when vast tracts of the countryside are buffeted by typhoons and flooding, there is almost never an accident insurance policy.


Non-life insurance has expanded rapidly, growing yearly by some 40 percent since 1994, largely because of burgeoning demand from owners of motorcycles and, now, cars in the cities.


Nevertheless, at some $150 million per year, the market is still tiny for a country of 75 million people.


Bao Viet's 30-year monopoly on the insurance market came to an end in 1994 with a new law allowing state-owned, private, joint-venture, and foreign enterprises to compete for business. But it still controls some 80 percent of the market and, at least for now, Baoviet Life has the life market cornered.


But Nai says that even with its head start, Baoviet Life finds the going tough. Since it started up in a small office block along a row of ramshackle shops five months ago, the company has sold just 1,000 policies and netted less than $100,000 in premiums.


Sixty percent of the policies sold are schemes for parents saving for their children's education. A post-war population boom has created intense competition for places in colleges, and the government has stopped covering all the costs of education.


More troublesome than selling the idea, though, is the question of where to invest to guarantee clients a good return.


"There are quite a lot of difficulties investing money," Baoviet Life's Nai says. "But as the market gets bigger, it's going to be even more difficult."


Moves are afoot to establish the country's first stock market, but government officials have indicated that it is not likely to be up and running before the turn of the century.