Table of Contents Overview of thesis 2 CHAPTER 1 SUMMARY OF SOME THEORIES OF LIFE INSURANCE 5 1 1 Basic definitions and concepts of insurance 5 1 1 1 Insurance definition 5 1 1 2 Terms related to insu[.]
SUMMARY OF SOME THEORIES OF LIFE INSURANCE
B ASIC DEFINITIONS AND CONCEPTS OF INSURANCE
According to Dennis Kessler (1994) “Insurance is the contribution of the majority to the misfortune of the minor.”
According to Monique Gaullier (1994) (Insurance is a business through which one party as the insured person will guarantee to pay an amount called the desired performance premium for themselves or for a third person in the event of a risk will receive a compensation for losses paid by another party - the insurer The insurer assumes liability for all risks and compensates for damages according to the methods of statistics.”
According to Etibu: Insurance is a mechanism that, under this mechanism, an individual, a business or an organization assigns risk to an insurance company, that company will indemnify the insured’s losses, which are covered by the insurance and divide the value of the damage among all the insured
The Law on Insurance Business of Vietnam (2000): Insurance business is an insurance business activity for the purpose of profit, under which the insurer accepts the insured's risks, on the basis of the purchaser of insurance pays the fees for the insurance enterprise to pay the insurance for the beneficiary or to indemnify the insured when an insured event occurs
We can generally see insurance as follows: Insurance is a financial category associated with economic relations arising in the process of forming, distributing and using insurance funds to ensure for the process of social reproduction and human life in society to be stable and develop normally in the condition of unfavorable events.
The nature of insurance : A division of the loss of one or more persons for all the insured to bear Insurance is based on the law of large numbers.
- The insurer is an organization responsible for building an insurance fund through the form of insurance premium collection and indemnity when there is a risk.
- The insured is an organization or individual currently residing in Vietnam, aged 18 or over, having full civil act capacity, who declares and signs on the insurance claim dossier and is a premium payer.
- The insured is an individual who is currently residing in Vietnam and is accepted by the insurer under the insurance contract.
- Beneficiary is an organization or individual designated by the policyholder to receive the insurance benefits in accordance with the insurance contract
- Insurable interest is the relationship between the policyholder and the insured, in which the insured's risk will result in a financial or moral loss to the purchaser of insurance
- Insurance premium is the amount of money that the buyer pays periodically to the insurance enterprise to be insured according to the term and the method agreed by the parties in the insurance contract
- Insurance money is the par value of an insurance contract agreed upon by the purchaser of insurance and the insurance enterprise in the insurance contract
- Contract term is the period of time when an insurance enterprise accepts insurance provided that the purchaser of insurance fully pays the premium according to the provisions of the insurance contract.
- Premium payment period is the period of time between two times when a periodic premium is due Payment period can be: Monthly, every 3 months (quarterly, every 6 months (half a year), annual.
- Perimum payment grace period: In the event that the customer is unable to pay the premium on the agreed deadline for any reason, the payable premium will be extended for an additional 60 days from the stated premium due date.
- Insurance profit is the income (not guaranteed dividend) reported to the policyholder each calendar year for the policies has been in force for at least 03 months Insurance profit will be announced annually, if any, is the percentage of the sum insured and the accrued insurance profit announced previously, if any, of the insurance product involving interest division, is the amount of money that the customer will only receive the full amount when the company pays the insurance benefit in accordance with the rules, terms of the insurance product Insurance profit is announced and accumulated annually.
Actual dividends are announced based on the company's business results and the economic situation If the economic situation and business results are not as expected, to reflect the real interest rate on investment, the company may reduce the dividend This is to ensure that the company always fulfills its contractual obligations and guaranteed interests.
- Withdrawal of accumulated dividends: After the second maturity date of the policy, the policyholder may request to withdraw part or all of the insurance in advance, which is included in the policy The amount of the bonus that is withdrawn first will be less than the face value of the bonus that is calculated based on the present value of the bonus, as well as depending on when the dividend is withdrawn The later the customer withdraws, the higher the dividend value will be.
- Insurance benefits when the contract expires is the amount of money that the beneficiary of the insurance benefit, in accordance with the policy of insurance, receives when the insurance contract expires
- Benefit of receiving advance from the cashback value: If the insurance policy has refundable value, the policyholder may be advanced an amount not exceeding 80% of the refundable value.
- The principle of only insure for the fortuity not certainty: Insurance is only one incident that happens suddenly, incidentally, unintentionally by a human, not one that will inevitably happen.
- The principle of utmost good faith: All business transactions should be done on the basis of mutual trust, absolute honesty Both the insured and the insurer must be honest in all matters.
- The principle of insurable interest: An insurable interest is related to, affixed to, or depends on the safety or insecurity of the subject-matter insured This principle states that the insured who wants to buy insurance must have an insurance interest An insurable interest can be an existing or an interest in the subject of insurance
- Indemnity principle: According to the principle of indemnity, when a loss occurs, the insurer must compensate in some way to ensure that the insured has the same financial position as before the loss occurred, nothing more and less The parties are not allowed to take advantage of insurance for their own profits.
S OME THEORIES ABOUT LIFE INSURANCE
1.2.1 Life insurance definition and related concepts:
Life insurance: A contract between an individual and a life insurance company to cover themselves or a relative, or between an organization and a life insurance company to cover its employees for the purpose of is to ensure financial security for the insured.
When an insurance event occurs, the life insurance company will base on the respective contractual terms of the product that the client participates in to pay the insurance benefits. Insurable interest that client will receive is clearly stated in the life insurance certificate
Insurance claim records is an insurance subscription form issued by an insurance enterprise An insurance buyer is obliged to fill out a complete and honest insurance request dossier Claim documents are considered an integral part of a life insurance policy.
Life insurance certificate is an insurance confirmation document issued by an insurer, listing the main insurance benefits of an insurance policy The life insurance certificate is an integral part of a life insurance policy package
Consideration time period of 21 days from the date of issuance of the life insurance certificate The purpose of this time is for customers to carefully and independently review their decision to buy insurance, especially after having had enough time to carefully read the book “Policy Terms and Conditions of Life Insurance” included in the contract that the client received This consideration period is also within the policy term.
Within 21 days of consideration, the client has the right to refuse to participate in the insurance to better suit their needs If the client does not want to continue to participate in insurance, the company will refund the premium paid by the client, after deducting medical examination expenses, if any
1.2.2.1 Insurance products are "unexpected" products
This is reflected in the fact that, for pure insurance products, even though they have purchased insurance products, customers do not want their risks to indemnity or pay for the insurance This feature makes it more difficult to exploit insurance products.
Saying so does not mean that insurance enterprises cannot conduct insurance business. Simply because although individuals and organizations "did not expect", but risks can still happen at any time Therefore, if you know the right time to propagate insurance, the exploitation of the product will still be successful.
Stemming from this feature, insurance products are often classified in the group of products "sold, not purchased" In other words, an insurance product is a product of "passive demand" - consumers are not actively looking to buy, but only buying when there are seller's marketing efforts Nowadays, along with the development of information technology, the sale of insurance online has been adopted by a number of companies and this has made insurance products like ordinary products Clients have actively bought these products, not products of passive demand anymore
1.2.2.2 The insurance product is the product of the "reverse accounting cycle"
If in other business lines, the product price is determined on the basis of the actual costs incurred, then in the insurance sector, the premium - the price of the insurance product is determined based on the estimated data of costs that may arise in the future such as indemnity payments (insurance payments), commissions, reinsurance expenses,
Expenses accounting for the largest proportion is spending on compensation These expenditures are determined primarily on historical statistics and future estimates of the frequency and extent of losses The use of statistics in the past to determine prices for insurance products for the future requires very closely to help businesses offset the costs that may arise to obtain a reasonable profit physical
1.2.2.3 Insurance products have "movement effect"
Businesses often collect premium in advance and pay compensation when insurance events occur, so if the probability of risk is large, their profits are reduced, and vice versa The efficiency of insurance business is difficult to determine at the present time, at the time when insurance products are sold.
Regarding the customer, the purchase of these products is also “able to move” - indefinite. This comes from the fact that not all insured customers also "receive" the insurance company's payout, or in other words, only when there are events that happen to see "the effect of insurance” And because of such a "moving efficiency", a life insurance product also has a profit sharing to increase its attractiveness
Term life insurance is signed only to cover the possibility of death occurring during the period specified in the contract If death does not occur within that period, payment cannot be made and the insured person will not receive any payment from the premium paid For this reason, premiums may be kept to a minimum as they are for life insurance only and will not pay any amount if the life insured is alive until the end of the contract.
Level term assurance is the most basic and cheapest form of term insurance because the premium stays the same for the life of insurance Life insurance company commits to pay the premium if the insured dies before the expiration date of the policy When the expiration date is reached, the policy is automatically no longer valid.
The main features of this type are as follows:
- Coverage for a specific period of time.
- Premium and insurance money are fixed
- No cash value or refund value
- This policy will become invalid after the deadline without paying the premium The main benefit of this contract is used to repay outstanding debts in the event of a death
O VERVIEW OF LIFE INSURANCE SITUATION IN V IETNAM AND OVER THE WORLD
1.3.1 Development history of life insurance
Life insurance was born and developed for a long time in the world The first form of life insurance appeared in London in 1583, the insured was William Gybbon Thus, life insurance was formed very early, but there are no development conditions in some countries due to lack of random technical basis, it is like a game that should be condemned by the church Because of the abuse of human life, life insurance must exist in many different forms However, due to the strong economic development, people's lives have been significantly improved, in addition to the continuous development of science and technology, life insurance has had conditions to develop on the wide scale With the appearance of Pascal and Fermat probabilities, the development of life insurance was an objective inevitable.
In 1759, the first life insurance company was established in the Americas but only sold policies to insure sheep in their church.
In 1762, Equitable life insurance was founded in England This is the first company to sell broad insurance policies to the people and apply the principle of constant premiums throughout the insurance period.
In 1812, another life insurance company was established in North America.
In 1860, a network of life insurance agents began to appear.
Up to now, life insurance has grown strongly and diversified From the basic types of life insurance are Term Life Insurance (Term Insurance), Life Insurance, Endowment Life Insurance, Pension Insurance Each insurance company designs products with its own characteristics to meet the financial needs of each residential area and in accordance with the economic and social policies of each country.
It is also common to have additional terms, in which the coverage is accident or desease, illness, serious illness occurring during the term of the main policy (which is one of the four categories above).
Around the world, life insurance now accounts for more than 50% of the insurance industry's sales.
1.3.2 Establishment and development of life insurance in Vietnam
Since 1986, Vietnam officially implemented the renovation policy, with an emphasis on shifting its centrally planned and subsidized economy to a market economy under the state management The renovation policy has really had a positive impact on the entire economic and social conditions of the country, bringing about stability and high economic growth, and improved people's lives The average annual growth rate of GDP in the past 10 years reached over 7% and in 2007 reached 8.5%; per capita income increased from 423 USD in 2001 to
835 USD in 2007; inflation is curbed and controlled; The proportion of poor households decreased from 58.1% in 1993 to 32% in 2000 and to 14.7% in 2007 Economic growth along with the gradual elimination of the subsidy mechanism has boosted demand and growth life insurance market of Vietnamese people.
1996 marked the birth of the life insurance industry in Vietnam by the Ministry of Finance allowing Bao Viet to pilot life insurance Responding to the requirements of the process of opening up and integration as well as the demands of the development of the life insurance industry itself After a pilot period, the Ministry of Finance issued licenses to foreign life insurance enterprises in turn (in 1999, three enterprises were granted licenses: Prudential, Manulife, Bao Minh - CMG - now Daiichi Life), then AIA (2000), Prevoir, ACE Life, Great Eastern Life, Cathay Life, Korea Life, Vietcombank Cardif, and Fubon (December 2010) Up to now, there are 12 enterprises operating on the market and it is forecasted that more life insurance companies will be licensed to operate in the near future.
With the entry of foreign life insurers, the Vietnamese life insurance market has witnessed a strong development in terms of size, product, service quality and professionalism Some notable numbers and information can be listed below:
- Regarding new exploitation: If in 1996, the new mining fee revenue of the whole market was less than 1 billion VND, by 2003 this figure was 2,050 billion VND (equal to 0.61% of GDP) and in 2010 it reached 2,478 billion VND VND (equal to 0.13% of GDP) Please note, during the period from 2004 to 2006, the market entered a period of decline and showed signs of recovery since 2007.
- Total premium revenue: In 2003, the total premium revenue of the whole market reached 6,442 billion VND (equal to 1.92% of GDP) and in 2010 reached 30,690 billion VND (equal to 1.7% of GDP) From this source of insurance premiums, the life insurance industry has provided a large amount of capital to the economy.
- Total number of insurance policies valid until the end of the first 6 months of 2010: 3,770 thousand main policies (equal to about 4.5% of population).
- On agency distribution channel: The market has created jobs for many laborers The total number of agents at the end of 2010 was 146,946 people.
- About products: Up to now, the market has provided the public with most product lines from traditional products to universal life insurance and recently unit linked insurance.
The development of the life insurance market in Vietnam is also a factor promoting the formation and development of the legal framework for the insurance market in general and life insurance in particular, marked by the birth of Vietnam's first insurance business law in2000.
R ELATED STUDIES
Development of the insurance market has been mentioned a lot in books, magazines and scientific forums However, within the scope of student scientific research topics, graduate dissertations of students of courses in the University of Commerce, this topic has not been exploited much, moreover, the research content is still much restrictions, such as:
- Graduation thesis "Improving the organization of life insurance marketing services at Life Insurance Company" done and protected in 1998 by Le Quang Vinh.
- Graduation thesis "The necessary financial solutions to the strategy of Vietnam Insurance Corporation in the current market economic conditions", by Le Ba Truong (Faculty of Accounting - Finance) under the guidance of Dr Dinh Van Son, protected in 2005.
- Graduation thesis "Perfecting management of distribution and sales channels at Hanoi Life Insurance Company", done by Pham Thi Thanh Huyen (Faculty of Commercial Business) under the guidance of Dr Nguyen Van Minh, protected in 2007.
- Graduation thesis "Marketing solutions to develop life insurance products market of BaoViet Life Company in Hai Duong", done by Bui Thi Minh Thu (Faculty of CommercialBusiness) under the guidance by Dr Pham Thuy Hong, protected in 2010.
The above studies have been very successful when focusing on analyzing marketing activities, sales distribution channels, of a life insurance company operating in the Vietnamese insurance market, and giving out the solutions to improve the organization and develop insurance businesses in the current life insurance market.
However, there is no systematic and comprehensive research on the life insurance market development Therefore, our team's research to develop the life insurance market in Vietnam is very important and useful to today's general Business students.
F ACTORS AFFECTING THE LIFE INSURANCE MARKET
In theory and practice, people consider the life insurance market as a whole Therefore, in order to effectively study the life insurance market in general and the influencing factors in particular, we need to classify the influencing factors according to reasonable angles. Specifically, those are:
This is one of the most important factors affecting the development of the life insurance market Because when the economy develops, people's income is improved, guaranteed and more stable, then people can think about saving and improving the quality of life, ensuring life And this is a condition for them to look for Life insurance products with the aim of contributing to stabilizing their lives, reducing financial difficulties when facing risks, ensuring their children can go to school, having income in old age.
On the contrary, when the economy is in decline, many production and business establishments have narrowed their production scale, workers do not have regular jobs, so their income will decrease This situation greatly affects the financial capacity of the establishments and individuals participating in the insurance They cannot afford the premium or owe the premiums in large amounts Life insurance operators find it difficult to find potential customers as well as a small number of insurance customers can no longer afford to pay premiums.
And the fact also shows that most of the developed countries that have developed economies are the 5 largest life insurance markets in the world today: the US, Japan, Germany, UK and France.
Gross domestic product (GDP) is one of the most important factors in assessing a country's economic development Gross domestic product per capita increased thanks to sustained economic growth When a country has an increasing and stable gross domestic product, it means that the economy is developing strongly and steadily, thus creating conditions for the development of the insurance market
Residential income highly increases, which shows that the basic needs of life have been fully met Therefore, people will look for other products to meet higher level needs, which is the need for safety, ensuring and improving the quality of life High residential income,people will be willing to use the excess money for savings and investment purposes At that time, the purchase of insurance products is one of the solutions people think about with the purpose of investing in the future, contributing to stabilizing their lives through compensating the risks that may occur with individual and family Therefore, residential income has an influence, closely related to the development of the insurance market.
The infrastructure is also a decisive factor in the development of the insurance market By aggressively spending on investment in infrastructure development, the State has shown incentives for insurance companies to enter the market, opening the door for investors in this field, thereby increasing the supply side in the market with great potential in the period of economic development.
These are the factors affecting people's psychology, affecting their awareness, cultural level, people's literacy and their habits towards insurance products, and more broadly, to the insurance market It can be said that these factors mainly influence the demand side of the market more.
The change in the number of population has an effect on the insurance market Therefore, when researching this market, we need to be properly aware of the role of population, because changes in population in quantity and structure will affect demand for insurance products In terms of quantity and quality, the supply of labor for this industry as well as other issues related to people, directly affects the development of the market.
With a good education, people's cultural level will be improved, and people's awareness and habits of using money will also change They have the ability to intelligently distribute and manage their own finance, making the right investment decisions for themselves, including buying insurance products When people are aware of the role of insurance in their lives for individuals, families and the whole society, they will be willing to participate in the insurance market, increasing demand and making the market bustling with diverse and rich needs At that time, if life insurance businesses as well as other types of life insurance create trust, create a sense of safety for the insured, it will lead to final buying decisions of client easily.
Culture is the most enduring factor affecting the psychology of consumers, because culture is always imprinted on the human subconscious, has a far-reaching influence and is often passed down through many generations Therefore, insurance products that want to exist and develop need to be designed to suit the tradition and culture of the locality and the country, so that clients can find them more suitable and acceptable.
In the field of insurance in general and life insurance in particular, the application of information technology has allowed insurance companies to computerize their service processes, reducing the cumbersome structure of their business organizations, diversifying distribution channels and service forms, enhancing customer service with high-tech ancillary services,
In addition, the rapid development of information technology creates a new consumer habit for client Client increasingly need to find out information through modern communication means such as Internet, phone, email, to be provided with general financial services such as insurance - investment – payment, Therefore, this is an opportunity for insurance businesses to thoroughly apply the achievements of science and technology, meeting the increasingly high and diverse needs of clients in terms of competition and integration
1.5.4 Globalization and international economic integration
Creating a more open business environment, integrating with the international economy will create many favorable conditions for market development: Encourage corporations, insurance companies, big investment companies to invest in this promising market, increasing foreign investment, promoting exchange, learning and cooperation between international insurance corporations, etc
1.5.5 State legal and policy environment
The State's policies can be domestic, foreign policies, economic opening policies, integration policies, These policies have a great impact on the development or shrinking of the life insurance market of that country.
RESEARCH METHOD AND THE RESULTS ANALYSIS OF THE CURRENT REALITY
M ETHODS OF STUDYING
The topic uses a combination of qualitative research methods, dialectical materialism methods, logical reasoning methods, statistical analysis methods, interpretive methods, inductive It also addresses issues from a general and specific development point of view in order to closely analyze the current situation of the life insurance market in Hanoi in the years from 2015 to 2020, evaluate the results achieved and surviving aspects and their causes From there, it is possible to propose solutions to develop the life insurance market in Hanoi in the coming time Some of the main methods that are specifically used are as follows:
First, the data collection method:
To survey data to meet the requirements of accurate and objective assessment of the current life insurance market in Hanoi, the topic uses many sources to collect secondary data on both the supply and demand side of the insurance market Data on revenue, agency market share, product market share and number of life insurance policies from 2015 to 2020 of life insurers and figures from articles published in newspapers, magazines, websites,
After collecting all necessary data, the topic processed data by different methods to analyze and evaluate the 5-year operating status of the life insurance market in Hanoi.
The data processing methods used in the study include:
- Make statistical tables of data for analysis, horizontal comparison, vertical comparison.
- Inference and logic analysis based on statistical data to make comments on the current situation of the life insurance market in Hanoi.
T HE IMPACT OF ENVIRONMENTAL FACTORS ON THE LIFE INSURANCE MARKET IN H ANOI
2.2.1 Economic conditions are the basis for the development of life insurance
- Vietnam's economy has grown strongly and continuously over the years, per capita income has always been improved in recent years, inflation has been maintained at a low level of less than 10%, the living standards of the population is constantly improving People have started to accumulate money and feel secure to use this savings to invest again in the economy, in which life insurance is one of the capital investment channels chosen by the people These are very important factors and are the basis for the development of life insurance in this period as well as the years to come
- Hanoi is a potential market for life insurance to develop
For the majority of people in Hanoi, life insurance is still a new field Therefore, determining the needs and choosing the right insurance products need the advice of staff with expertise and necessary skills when consulting insurance and it is important that they understand the circumstances and needs of customers This is a great challenge for people working in the life insurance field, but also opportunities for life insurance companies to explore and develop markets Therefore, the State as well as insurance enterprises need to advertise to the people the meaning and benefits of participating in life insurance By doing this, the Hanoi insurance market can be exploited effectively.
Vietnam life insurance market currently has a fast growing rate and still has a lot of unexploited potential In addition, with the integration strategy of Vietnam's economy, the insurance participation of enterprises is no longer a strange concept Vietnamese people only invest in insurance for themselves 500 USD/person/year, while Singaporeans spend up to 2,000 USD/person/year and Japanese people spend up to 5,000 USD/person/year.
The increase in consumer price indexes together with the continuous fluctuation of gold and
US dollar prices has influenced people's decisions to use their savings to buy long-term life insurance Without much calculation, consumers also find that the immediate bank deposit interest rate is higher than the interest that insurance contracts can bring them Besides, in the financial market, new and attractive products also appear.
- Socio-cultural conditions have many advantages for the development of life insurance. Population Vietnam is a densely populated country in the world Vietnam's population is more than 97.58 million people and Hanoi is 10,5 million (2020), in which people of working age and children make up the majority However, the number of new life insurance participants is about 10 million people, the proportion of the population participating in life insurance is only about 10%, while the average rate in countries is 20-25%, compared to Countries in the region and the world are still little This is the premise that life insurance is still very potential in Vietnam This proves that the Vietnam and Hanoi market is still full of potentials for insurance companies to develop.
Dr Dinh Quang Nuong, General Director of Great Eastern Insurance Company (GE)Vietnam commented: “With its large population and improving people's lives, Vietnam is a very promising market Demand for insurance is increasing rapidly in all subjects, sectors and ages of the population If compared, other countries in Asia have about 20-40% of the population buying insurance, while this rate in Vietnam is only about 10% The cost of insurance in developed countries accounts for 10-15% of GDP, in Vietnam, this cost only accounts for 2% of GDP In addition, quite a few foreign insurance companies have penetrated the Vietnamese market, with diversified and plentiful types of insurance, while people are becoming more and more aware about buying insurance.”
- In terms of culture, Vietnam is an Eastern country, and is heavily influenced by Confucianism, family and love of blood are always highly respected by Vietnamese people. Wherever they are, every year, every Vietnamese person always looks to their homeland and their national roots with a passionate affection With the spirit of mutual love, the good leaves that support the torn leaves, every Vietnamese person is always willing to share with the difficulties that the people have to endure even though the contribution is simple It can be said that this cultural feature of Vietnamese people has created a very attractive market for life insurance, because life insurance is a profound expression of responsibility and immense love for relatives, family and society Moreover, Vietnamese people also have a characteristic of thrift, "foresighting" to ensure life for themselves and loved ones in the future Meanwhile, life insurance is an effective tool to solve this problem
- In terms of education, Vietnamese have a long tradition of fondness for learning and respect for the religion Parents are always concerned about educating their children and it is the first factor in their responsibility to raise their children Parents are always ready to sacrifice their personal interests to give their children the best learning conditions Basically, up to now, Vietnam has completed universal primary education and is gradually improving the educational level for the next grades Life insurance itself is an economical solution that is very suitable for this goal, especially when the cost of higher education is getting more and more expensive
What many insurance companies acknowledge is that after a period of extensive deployment, now comes the stage of periodic fee management and deep customer service, but a customer care network of some companies are limited, the service quality is not as expected, so it has met the reaction of many customers This reaction affects more or less the whole life insurance market While people's awareness of life insurance has increased over time, and their service requirements are higher and higher, the declining service quality did not meet the demands of insurance buyers Some insurance agents run after profits, advise incorrect terms with contracts, promise too much When an incident occurs, the insurance company only compensates according to the signed contract From here on, client confidence is eroded.
On the other hand, the recent media disputes between customers and insurance companies also showed the complexity of insurance Some consumers recognize that complexity and have concluded that it is best not to buy life insurance.
In addition, insurance buyers are wiser and more cautious People who previously spent large sums of their income on insurance premiums began to realize that insurance does not make their money multiply faster than other forms of investment In addition, Vietnamese people often think less about risks and compensate when buying insurance, but mainly calculate investment, ignoring the protection aspect, which makes insurance not have many advantages compared to other investment channel.
2.2.3 Information technology is now available for Life Insurance Application
The strong development of information technology in Hanoi has created a significant information technologies has helped Vietnamese insurance businesses to manage their operations systematically and efficiently, reducing the cumbersome and inconvenience of previous administrative procedures, better meet customers' needs for convenience when paying, diversifying distribution channels as well as attentive customer care through techniques, high technology It can be said that, Information technology has actively supported both insurance providers and customers, helping Hanoi's insurance market to develop conditions.
2.2.4 Globalization and economic integration facilitate leapfrog for life insurance
Globalization and economic integration is an inevitable trend for the development of any country in the world today The opening of the economy in our country in recent years has created many opportunities for fields and industries, including insurance and life insurance. The participation of large foreign life insurance companies in Hanoi life insurance market has strong financial potential and experience in life insurance business such as AIA, Prudential, FWD has created a premise for the rapid development of Hanoi's life insurance market, promoting the development of the insurance market
Globalization and economic integration are also contributing to the changes in the way of thinking and doing of the Vietnamese people Instead of relying on state subsidies, people have to learn to take care of themselves and adopting life insurance practices is a positive way of thinking and doing
2.2.5 Legal environment and State policy on insurance business for a healthy development market
During the period from 1965 to 1993, the State monopolized the insurance business with only one insurance enterprise, Bao Viet, both conducting insurance business and performing the state management function Currently, the State and the Government have paid more attention to encouraging the development of Vietnam's insurance industry The Vietnamese government is committed to building a fair and coherent insurance business environment with reforms to the legal system This is demonstrated by:
R ESULTS OF SECONDARY DATA ANALYSIS
2.3.1 Life insurance market supply situation in Hanoi
Supply in the life insurance market is the insurance products provided by the business enterprises in the market to serve and meet the diverse needs of insurance customers. Enterprises participating in the insurance service business in the life insurance market may increase or decrease depending on the needs of the market and competitiveness Products on the insurance market are always improved to adapt to the market Life insurance products are more and more and more completed, along with the socio-economic development and increasing living standards of the people Life insurance products are always improved, perfected and renovated to meet the diverse and diverse needs of the market
2.3.1.1 Life insurance companies in Hanoi
Currently on the life insurance market, Hanoi has 17 life insurance companies which are listed in the table below:
N o Company name Description Main products
Insurance As the first and largest life insurer in
Vietnam, official business date: June 22, 1996
Bao Viet Life Corporation (Bao Viet Life) has more than 2,100 employees and 240,000 professional insurance advisors, a service network at 76 member companies and hundreds of customer service departments across the country.
Bao Viet Life has more than 20,000,000 customers nationwide.
Prudential is bringing more than 1.5 million Vietnamese people effective solutions to financial protection and increase assets With a team of more than 200,000 dedicated and professional consultants, 360 general agent offices, transaction offices and customer service centers, a hospital fee guarantee system at more than 127 hospitals and clinics, Prudential is attracting more and more attention of clients
- PRU - Lifetime confidence in your education plan
- PRU - Lifetime peace of mind
- PRU - Take initiative in life
With the approval of the Ministry of Finance on January 18, 2007 for the transfer of Bao Minh Life Insurance Company CMG, Dai-ichi Life Insurance Company (“Dai-ichi Life Vietnam”), formula was established Entering Vietnam market, Dai-ichi Life brings experience of more than 100 years in the life insurance industry
- Personal health care insurance - health insurance
4 Manulife Co., As the first 100% foreign owned life insurance - Lifetime life insurance - Hanh
Ltd company in Vietnam, Manulife started operating in September 1999 as a joint venture under the name of Chinfon-Manulife Insurance Company (referred to as “CMIC) ") On December 31,
2001, Manulife became a wholly owned company in Vietnam After acquiring 40% of capital contribution from joint venture partner, Chinfon Global Group, the company was renamed Manulife Company Limited (Vietnam). trinh hanh phuc
- Health insurance - Cuoc song tuoi dep uu viet
- Savings insurance - Chap canh tuong lai uu viet
- Term Life Insurance - An tam vui song
- Savings insurance - Diem tua dau tu
Co., Ltd AIA Co., Ltd (Vietnam) is a life insurance company with 100% foreign capital and a member of AIA Group, officially operating in Vietnam since February 2000 AIA Vietnam is protecting financial safety for more than 1,200,000 clients, insurance benefits for more than 600.000 cases, the total amount of insurance benefits is 5400 billion VND.
- An sinh thinh vuong 15 years
In January 2013, PVI Sun Life was established by PVI Joint Stock Company and Sun Life Assurance Company of Canada (Sun Life).
As of December 31, 2015, Sun Life increased the holding rate of charter capital to 75%, and on
Ministry of Finance, Sun Life bought another 25% of the remaining capital from PVI to become a life insurance company with 100% Canadian capital operating in Vietnam with a new brand name Sun Life Vietnam Limited Liability Company (Sun Life Vietnam).
- SUN – Tron ven uoc mo
Established in 1831 in Trieste (Italy), Generali Group is one of the leading insurance companies in Italy, Germany, France, Austria, Spain and Switzerland with strong positions in Central- Western Europe, and China National and other developed countries.
Generali Vietnam (GVL) is the latest development of Generali Group in entering the Asian market Generali Vietnam was licensed by the Ministry of Finance of Vietnam on April 20, 2011.
- VITA – Bao an toan dien
Prévoir Vietnam Co., Ltd (Prévoir Vietnam) belongs to the French Prévoir Insurance Group, a 100% foreign owned company operating in the life insurance sector In September 2005, Prévoir Vietnam and Vietnam Posts and Telecommunications Group (VNPT) signed an exclusive contract to distribute Prévoir Vietnam's postal life insurance products on VNPT's postal network for a period of 10 years Mirae Asset Prévoir's life insurance packages are tailored to
- Long-term death insurance the lifestyle, provide innovative solutions and meet the constantly changing needs of customers in different phases of life Life such as savings, education, investment in resort tourism, health care.
- Term insurance personal credit balance
Cathay Co., Ltd was established in August
1962, a subsidiary of a leading financial group, Cathay Cathay Vietnam Life Insurance Company Limited has a total current investment capital of
290 million USD As of the end of 2019, Cathay's revenue reached 1055 billion, up 53% over the same period in 2018 Cathay Life Vietnam's total assets are more than 9600 billion VND.
- Thinh vuong an tam toan dien
- Thinh an tich luy cat tuong
- Thinh an tich luy tron doi uu viet
- Thinh tri an tam thanh tai
- Thinh an phu quy dai cat
- Thinh an phuc my toan dien
Chubb Life is the global life insurance division of Chubb This is the leading insurance company in introducing a lifelong financial plan product line into Vietnam market since March
2006 Since then, Chubb Life has developed more Full Financial Planning products allowing clients to choose the plans that suit their financial needs.
According to the business operation report of Chubb Life Vietnam, the company's total premium revenue in 2019 will reach more than VND 3,500 billion (an increase of 17% compared to 2018) Profit before tax reached over 565 billion VND, contributed 161 billion VND to the State budget through taxes and other items.
Equity reached over 2,829 billion VND by the end of 2019, up 19% from the end of 2018 and 4.7 times higher than legal capital.
- Insurance from credit balance period
- Personal Financial Plan with Critical Illness Benefits
- Family Financial Plan with Critical Illness Benefits
- Lifetime Financial Plan - Comprehensive Seniors Benefits
Korea Life is a key member of Hanwha Group, one of the 10 largest corporations in Korea and in the list of 500 largest corporations globally In
2009, officially opened Korea Life Insurance Company Limited (Vietnam) According to data provided by Hanwha Life Vietnam, as of January 2020, the company has been trusted by more than 600,000 customers and entrusted the responsibility of protecting themselves and their families In 2019, the company paid 172 billion VND to customers who were unfortunately at risk to help them overcome difficulties and stabilize their lives early Hanwha Life's total new insurance premium revenue reached VND 1,050 billion at the end of December 2019, an increase of 20% compared to the same period in 2018.
- Hanwha Life – Nguoi ban dong hanh
Aviva is the number one insurance group in the
UK, ranked sixth in the world in premium revenue with over 300 years of experience In Vietnam, Aviva started operating in the insurance sector in 2011, formerly known as VietinBank Aviva Life Insurance Company - a joint venture between Aviva Group and VietinBank In 2019, Aviva Vietnam's annual premium is nearly 1,000 billion VND, total premium revenue is 2,226 billion VND Aviva Vietnam deploys insurance distribution models on two main channels:
Bancassurance (sold through banks) and professional agents In 2019, the annual premium of bancassurance channel accounts for 50% and professional agency is 45%.
- Aviva - An tam hung vuong
- Aviva - An tam vung nghiep
- Phat loc hung gia uu viet
Co., Ltd On December 23, 2010, Fubon Vietnam Life
Insurance Company Limited (100% owned by Taiwan Fubon Life Insurance Company) officially received the license to establish and operate in Vietnam issued by the Ministry of Finance On July 1, 2010, Fubon Life Insurance Company was approved by the Ministry of Finance of Vietnam in principle to establish a life insurance company, on December 23, 2010, received the License of establishment and operation , officially established Fubon Vietnam Life Insurance Company Limited (Fubon Vietnam Life Insurance for short) Fubon Life Vietnam is among the top life insurance companies with the highest growth rate in the market with premium growth rates of 60% and 47% in 2017 and 2018.
Co., Ltd BIDV MetLife Life Insurance Company
Limited is a joint venture between MetLife Company Limited (owned by MetLife Group), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and a subsidiary of BIDV - BIDV Insurance Corporation (BIC).
BIDV MetLife offers client comprehensive financial, insurance and welfare solutions through a network of more than 700 BIDV transaction points nationwide.
Co., Ltd In 2013, Phu Hung Life Insurance Joint
Stock Company (Phu Hung Life) officially entered the life insurance market in Vietnam and was the first joint stock company operating in the life insurance field, with the capital of 633 billion.
Shareholders of Phu Hung Life include: Phu
My Hung Company, Phu Hung Non-life
Company under the direction of Ting Family - a family known for its outstanding success in business and the significant contribution to Vietnamese society over the past 25 years.
16 MB Ageas Life In August 2015, Ageas and Muang Thai Life
Assurance signed an agreement with MB Bank on the cooperation to establish a joint venture in Vietnam under the brand name MB Ageas Life.
On July 21, 2016, the Ministry of Finance issued a license to establish MB Ageas Life Insurance Company Limited From March 2017, the company officially distributed its products to the Vietnamese market.
MARKET SHARE BY THE NUMBER OF AGENTS
Table 2.7: Market share by the number of agents of some life insurance companies
(*) The number of Prudential, Daiichi and Hanwha agents in 2019 is mainly calculated according to the number of organized agencies
(Source: Ministry of Finance of Vietnam)
Chart 2.3: Market share by the number of agents of some life insurance companies in 2016
Leading the market share in terms of number of agents are still three major insurance companies, Prudential Vietnam, Bao Viet Life and Daiichi Life Vietnam In fact, this is a consistent result with the efforts and proper attention to the strategy of improving the quality of training and developing the number of agents of companies.
2.3.2 Vietnam life insurance market demand situation
Table 2.8: Number of effective life insurance policies from 2015 - 2019
(*) Investment-linked includes Unit linked and Universal linked
(**) Total number of Policies and Total of sum assured do not include riders
(Source: Ministry of Finance of Vietnam)
From the table above we can calculate the percentage increase or decrease in the number of life insurance policies over the years 2015 - 2019, specifically in Table 3.9
Table 2.9: The rate of increase or decrease in the number of life insurance policies in effect by classification from 2016 to 2019
(Source: Ministry of Finance of Vietnam)
Vietnam's population as of March 2021 is about 97.9 million people, while the total number of valid life insurance policies is just over 10 million contracts, which means that the new life insurance market is only exploited 10.2% of the market potential With this figure, the life insurance market in Vietnam is still being evaluated by foreign investors as a market with great potential.
Instead of buying life insurance to support relatives or friends as insurance agents as in the first time, today's clients are very much interested in the real benefits they get from life insurance The number of life insurance policies has increased sharply over the years, the most breakthrough is investment-linked insurance with an increase of 300.77%, and especially, attracting more and more attention of modern clients are supplementary products with an increase of 114.3% in 5 years.
When people's awareness of insurance is raised, the value of insurance contracts signed by customers with insurance companies also increases dramatically Insurance contracts with a value of up to several tens of billion dong have become a daily story in the life insurance market in Vietnam.