The insurance industry is forecast to continue gaining double-digit growth this year thanks to new bancassurance contracts signed late last year and the recovery of the economy.

Under a recent report on the insurance industry, the Saigon Securities Incorporation (SSI)’s experts said growth of the premium revenue for life and non-life insurance segments in 2021 would be 22% and 10-12%, respectively, against last year.

In 2021, insurance companies can reach a larger group of potential customers thanks to new exclusive bancassurance contracts signed last year and the demand for life insurance products remains good, according to the report.

Experts also predict that if the COVID-19 pandemic is controlled and social distancing lifted, insurers can recover their promotion activities such as meetings and customer conferences as before.

Economic recovery will also contribute to boosting non-life insurance. SSI expects GDP growth to return to 6.5% in 2021 as economic activity recovers. As a result, insurance in cargo, aviation and travel will be able to achieve levels as high as they reached before the pandemic.

However, the insurance industry would still have to encounter risks this year including low interest rates and increasing re-insurance costs, the experts said.

The low interest rate environment, which has lasted for a long time, will a reduction in profits as most of the insurers’ investment portfolios are bank deposits and Government bonds.

In addition, if the Government bond yields drop, profits will be negatively affected due to higher life insurance reserves.

As for increasing reinsurance costs, in recent years, since Vietnamese insurance companies have suffered big losses, particularly in asset insurance, international reinsurers have increased the reinsurance prices. This trend is forecast to continue in medium- and long-term, affecting the capacity of non-life insurance, according to the SSI’s report.

Last year, aviation, travel and freight insurance which accounted for about 6 percent of the total non-life insurance premium revenue, was heavily affected by COVID-19.

But the demand for health and life insurance products has recovered fairly well after a period of social distancing. The revenue of the segment mainly dropped in the social distancing period in March and April 2020, but then has recovered strongly. According to the Association of Vietnam Insurance, the health and life insurance premium revenue in the first three quarters of 2020 increased by 25.6% and 21.2%, respectively, against the same period of the previous year.

SSI’s report said that among the top 10 leading non-life insurers, only BVH and PVI recorded market share decline in nine months of 2020, while among the top 10 leading life insurers, six including Manulife, AIA, Generali, MB Ageas, FWD and AVIVA succeeded in increasing their market share.

Most notably, at the end of 2020, Manulife completed the acquisition of AVIVA Vietnam. This helps the company’s life insurance market share increased to about 18.5%, ranked behind Prudential with 18.8%.