Market share of leading insurers being narrowed

VNStockNews.com - The non-life insurance market witnesses the participation of new companies supported by other big insurers.

2009 will be a unsuccessful year as for Bao Minh Insurance Co (BMI) as losing earnings from insurance for Vietnam aviation and coal mining. In March 2007, Tran Vinh Duc, general director of BMI committed to become the leading ceded insurance company for Vietnam Airlines with total insurance value of more than US$4 billion. Last year BMI contracted to insure total nine million arrivals of passengers and flying crew of the national carrier.

According to the analysis of Saigon Securities Inc (SSI), BMI is gradually losing market share to the competitors when the aviation insurance segment was taken over by Vietnam National Aviation Insurance Joint Stock Co (an arm of Vietnam Airlines) established in 2008 by four shareholders.

Also, the insurance provision to coal miners in Quang Ninh province, which previously was in charge of BMI, now belongs to SHB Vinacomin Non-Life Insurance Co (SVIC)-a joint venture between Saigon Hanoi Commercial JS Bank (SHB) and Vietnam Coal and Minerals Group (Vinacomin) and some other shareholders. Selling insurance products to over 40 members of Vinacomin brought in a huge turnover to the joint venture.

Ban Viet Securities Co analysed, in the first half of 2009, PetroVietnam Insurance JSC (PVI) led among Vietnam's top five non-life insurers in terms of insurance premium thanks to the petroleum insurance sector jumping 94.04% y-o-y. Similarly, Military Insurance Co (MIC) reported it is responsible for insuring major works worth of trillions of dong like Dong Truong Son, hydropower plants, bridge and road construction or providing accident insurance for military officials.

Statistics of the Association of Vietnamese Insurers (AVI) showed that in Jan-June, four non-life insurance firms including Bao Viet, Bao Minh, PVI and PJICO dominated over 72% of market share, and the remainder belongs to 27 other non-life insurers.

In which, newly established firm SVIC and Vietnam National Aviation Insurance Joint Stock Co accounted for 1% and 1.99% correspondingly. To reach such a ratio, new insurance firms have to spend many years.

Ban Viet broker said, the market share of leading insurance companies is being narrowed. In first half, the revenue of Bao Viet Insurance Co rose by 0.54% year-on-year, BMI down 8.81%, PJICO soaring 6.24% and PVI up 35.25%.

PVI placed BMI behind to take the second position in terms of insurance market share. According to AVI, PVI occupied 23.6% of market share in Jan-June while Bao Vietnam took 26%, reducing 4.5% against 2008 while Bao Minh's market share fell from 17.3% in 2008 to 14.1% in H1 of 2009.

Some companies have taken sectoral advantages to develop market. Quoting Le Nhu Truong, southern director of SVIC, the market now has not insurance product for mining accident so SVIC is inviting foreign specialists to design mining accident insurance and specialised products for mineral and coal mining.

HCM City Securities Co said that the product portfolio of PVI contains more risks than that of other insurers. However, PVI still considers PetroVietnam's support as a competitive advantage for future development.