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Capital Contribution Structure at Bao Minh (As of December 31, 2017)

Ordering process, collection process, compensation process... Motor vehicle insurance cases have support to reduce repair time. At the same time, increase investment in equipment, new management software in insurance records management.

It can be emphasized that the application of marketing mix is ​​highly valued by these businesses, thereby increasing business efficiency. The coordination or priority selection combined with different elements of 7P has helped these businesses improve their position in the market. It can be said that these are valuable experiences for Bao Minh in applying marketing mix.

Chapter 2 Summary

Chapter 2 of the thesis focused on presenting and analyzing the theoretical and practical basis for applying marketing mix in insurance business, including the concept, role, and characteristics of insurance business, the concept and content of applying marketing mix in insurance business, and the experience of applying marketing mix of some insurance companies.

Obviously, insurance is a financial service provided by an insurance company to customers and customers have to pay a fee for that service. Customers buy this service to prevent and minimize risks. In essence, it is a way to share risks in life or business to limit possible losses. This sharing method must be done through a contract between the supplier and the customer.

Insurance is classified based on many different criteria, including classification by insurance objects, by management methods, by operational purposes and by insurance techniques. Insurance businesses are established and organized according to the provisions of the Law on Insurance Business.

The main characteristic of insurance is that it is an intangible product, a service product that buyers cannot see but can only feel and evaluate before buying and sellers can only describe the benefits based on experience. This characteristic governs the insurance business activities of enterprises and governs the buying behavior of customers. In order to do business effectively, insurance enterprises must use many different tools, including the application of marketing mix. Reality shows that this is an important tool to create competitive advantage for enterprises if they apply it well.

Applying marketing mix in insurance business is an art in building, operating and implementing seven types of decisions, including products, pricing, distribution, promotion, human resources, operating procedures, means and facilities. And evaluating the effectiveness of applying marketing mix must be based on certain criteria such as increasing the number of customers, return on investment, sales, profit on advertising costs, etc. The application of marketing mix is ​​influenced by many factors, including economics, politics, law, society, technology, business, customers, competition, etc. These factors have many impacts on the application of marketing mix of insurance companies. The effectiveness of applying marketing mix depends on taking advantage of the positive effects and limiting the negative effects of these factors.

Chapter 3

CURRENT STATUS OF BAO MINH'S MARKETING MIX APPLICATION


3.1. Overview of Bao Minh

The year 1986 marked a turning point in the economic development of our country. Vietnam opened its economy, attracting investment from many countries and regions with innovative policies, creating favorable conditions for economic sectors to participate. Production and business activities gradually developed, people's lives were improved, requiring the insurance industry to also innovate to meet the needs and adapt to the new situation. On December 18, 1993, Decree 100/CP on insurance business activities was issued by the Government, opening a new development step for the Vietnamese insurance industry. It broke the existing monopoly, creating the premise for the birth of insurance enterprises with many different forms in all economic sectors.

In that context, under the direction of the Government and the Ministry of Finance, the Ho Chi Minh City Insurance Company Branch (abbreviated as Bao Minh) under the Vietnam Insurance Corporation was separated to operate independently according to Decision No. 1146 TC/QD/TCCB dated November 28, 1994. From then on, Bao Minh became a 100% state-owned enterprise under the Ministry of Finance.

Bao Minh officially started operating in early 1995 with an initial capital of only 40 billion VND and 84 employees. In 2004, Bao Minh Insurance Company equitized and transformed into a joint stock corporation model according to Decisions No. 1691/2004/QD-BTC dated March 3, 2004 and 2803/QD-BTC dated August 30, 2004 of the Ministry of Finance. The company officially operated under the new model based on the establishment and operation license No. 27/GP/KDBH dated September 8, 2004 of the Ministry of Finance. To date, Bao Minh is the third largest enterprise in the non-life insurance market, with a charter capital of 913 billion VND, owner investment capital of up to 2,171 billion VND and a widespread network of operations through 62 branches nationwide [31].

- Bao Minh officially operates under the model of a Joint Stock Corporation.

- Received the Second Class Labor Medal from the President.

1994

1997

1999

2004

2006

Bao Minh was established on November 28, 1994, initiating the formation of the Vietnamese insurance market.

- Bao Minh contributed capital to establish Bao Minh Life Insurance Company.

– CMG

- Received the Third Class Labor Medal from the President.

Main

awake

listed at TT

Deliver

pandemic

Hanoi Securities


- Conduct BEST project - core software application in business management.

- Received the First Class Labor Medal from the President.

- Annual General Meeting of Shareholders to finalize personnel for the 2014 - 2019 term.

- Agreed to increase the actual contributed charter capital by 10% from 755 billion to 830.5 billion VND.

2008

2009

2011

2014

2016

Ancient Congress

Annual General Meeting approved the business strategy for the period 2016 –

2020.


Bao Minh contributed capital to establish United Insurance Company (UIC)

Establishment of BM Securities Joint Stock Company.

Listing BMI shares at Ho Chi Minh Stock Exchange

Ancient Congress

Annual General Meeting approved the 2011 business strategy

– 2015.

Source: Bao Minh, 2018, Annual Report 2018 , Bao Minh Joint Stock Corporation

Diagram 3.1: Important milestones of Bao Minh

Bao Minh operates in the fields of non-life insurance, non-life reinsurance and financial investment. Currently, Bao Minh is providing more than 100 necessary insurance products for individuals, businesses and the economy such as: property insurance, construction insurance, motor vehicle insurance, engineering insurance, human insurance, marine insurance,...

Over the course of more than 25 years of formation and development, Bao Minh has built a clear management structure with a strong workforce spread across the provinces and cities. Bao Minh is operating under a 2-level model: the General Corporation level and the member company level. At the General Corporation, there are 24 departments, offices and functional centers. The member company level includes 62 units with 550 transaction and exploitation departments nationwide. In addition, Bao Minh also has a specialized training center (See the organizational chart of Bao Minh Joint Stock Corporation in the appendix).

Since February 2015, BM has carried out a comprehensive and extensive restructuring of the entire system; reorganizing and rearranging departments, offices, and centers at the Head Office to manage in a professional and specialized manner. Reorganizing the business network of member companies in the direction of developing distribution channels, by opening and relocating district and county-level exploitation offices, to ensure wide coverage of exploitation channels and serving customers anytime, anywhere. Reducing units with small markets and ineffective business operations, ensuring to minimize organizational and cost cumbersomeness.

Table 3.1: Capital contribution structure at Bao Minh (as of December 31, 2017)


STT

Shareholder name

Capital contribution

(billion VND)

Rate (%)

1

State Capital Investment Corporation

463,173

50.70

2

AXA Insurance Finance Group (France)

152,097

16.65

3

Firstland Company Limited (Group)

Chevalier)

51,626

5.65

4

Bao Minh employees and external shareholders

246,643

27.00


Total

913,539

100

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Capital Contribution Structure at Bao Minh (As of December 31, 2017)

Source: Bao Minh, 2018, Bao Minh Annual Report 2017 , Bao Minh Insurance Corporation, p. 4.

In 2017, the total original insurance premium revenue of the life insurance market reached 41,344 billion VND, an increase of 11.75% compared to the same period in 2016. The ranking of the leading enterprises in the market in terms of original premium revenue has not changed in recent times. The number 1 position is still Bao Viet with revenue reaching 8,050 billion VND, an increase of 22.6% compared to the same period in 2016. Next is PVI with revenue reaching 6,689 billion VND, equivalent to more than 16% of the market share.

Table 3.2: Original insurance premium revenue of non-life insurance companies in the period 2015 - 2017

Unit: billion VND

STT

Insurance company name

2015

2016

2017

1

Bao Viet

5,828

6,564

8,050

2

PVI

6,457

6,527

6,689

3

Bao Minh

2,819

3.102

3,395

4

PTI

2,461

3,096

3.206

5

PJICO

2,330

2,494

2,611

6

Other businesses

12,255

15,213

17,393


Total

32,150

36,996

41,344

Source: Bao Minh, 2018, 2017, Bao Minh Annual Report 2017 , 2018,

Bao Minh Insurance Corporation.

Bao Minh is currently ranked third with revenue of VND 3,395 billion, up 9.45% compared to 2016 and accounting for 8.22% of Vietnam's non-life insurance market share. Looking at the table above, it is easy to see that Bao Minh's revenue growth is slower than that of Bao Viet, PVI, PTI, PJICO. This is the period when Bao Minh focuses on improving the quality of management, including marketing management and corporate governance. Increasing investment in the field of information technology to serve the purpose of improving business efficiency.

Table 3.3: Market share of insurance premium revenue in 2017

STT

Insurance

Market share (%)

1

Bao Viet

19.36

2

PVI

16.08

3

Bao Minh

8.16

4

PTI

7.71

5

PJCO

6.28

6

Other

42.41

Source: Ministry of Finance, 2018, Vietnam Insurance Market in 2017 , Finance Publishing House, p.10

In addition to the leading insurance companies in the market, other companies also had many changes. There were companies that not only maintained their market share but also had a growth rate of original insurance premium revenue of over 50% compared to the same period in 2016 such as QBE (198.2 billion VND, up 50.12%), GIC (1,151 billion VND, up 64.87%). However, there were companies with large revenue decreases such as Groupama (25 billion VND, down 77.38%), AAA (242 billion VND, down 13.35%), AIG (406 billion VND, down 13.35%),

down 19.93%).

Table 3.4: Bao Minh's business situation in 2017

Unit: billion VND


STT


Target

TH 2016

Business Plan 2017

% TH 2016/2017

Plan

plan

TH

2017

%

TH/KH

1

Total revenue

3,751

3,918

4,096

104.5

109.2

2

Original premium

3.101

3.322

3,396

102.2

109.5

3

Reinsurance premium

371

407

429

105.3

115.5

4

Financial Revenue &

other income

279

189

271

143.4

97.1

4

Net revenue from operations

KDBH

2,729

2,883

3,176

110.2

116.4

5

Total business expenses

2,679

2,815

3.166

112.5

118.2

6

Total compensation

TNGL Insurance

1,065

1.126

1,258

111.7

118.1

7

Contract Exploitation Cost

KDBH

1,430

1,494

1.801

120.6

126

8

Large fluctuation reserve

26

28

-7

-25

-26.9

9

Business management costs

career

158

167

114

68.3

72.2

10

Net profit from

KDBH

50

68

10

14.4

19.5

11

Operating profit

finance

174

130

188

144.8

108.2

12

Total accounting profit

before tax

223

198

198

100

88.8

13

Total profit after

tax

182

163

163

100

89.6

Source: Bao Minh, 2018, Bao Minh Annual Report 2017 , Bao Minh Insurance Corporation, p. 5.

Looking at the table above, it is easy to see Bao Minh's business growth rate in the period 2016 - 2017. Specifically, in 2017, Bao Minh's total revenue reached

4,096 billion VND, reaching 104.5% of the plan, up 9.2% over the same period last year. Of which:

- Original insurance premium revenue was VND 3,396 billion, reaching 102.2% of the plan, up 9.5% over the same period last year.

- Reinsurance revenue was 429 billion, reaching 105.3% of the plan, up 15.5% over the same period last year.

- Financial revenue was 271 billion VND, reaching 143.4% of the plan, up 97.13% over the same period last year.

- 3/4 of the original insurance business groups completed and exceeded the average plan such as: marine insurance business reached 112.39% of the plan and 99.47% compared to the same period; Technical property insurance reached 100.1% of the plan and grew 6.84% compared to the same period. The human insurance business group reached 109.68% of the plan and increased 25.93% compared to the same period [31, p. 6].

Table 3.5: Insurance premium revenue of main product groups 2016-2017 of Bao Minh

Unit: billion VND

STT

Karma group

service

Perform

2016

Plan

2017

Perform

2017

% refund

KH city

% vs.

TH 2016

1

Maritime Group

374

331

372

112.39

99.47

2

Asset Group

906

967

968

100.1

106.84

3

Motor vehicle group

gender

850

995

831

83.52

97.76

4

Subgroup

People

972

1,116

1,224

109.68

125.93

5

Receive Reinsurance

dangerous

372

407

429

105.29

115.2

6

Total

3,474

3,816

3,824

100.2

110.06

Source: Bao Minh, 2018, Bao Minh Annual Report 2017 , Bao Minh Insurance Corporation, p. 11

Looking at the data in the table above, we can see more clearly the development of Bao Minh's insurance business in the period 2016 - 2017. Specifically:

Marine Insurance has a high growth rate compared to the insurance market. However, marine insurance is still very difficult because the number and value of Vietnamese ships continues to decrease sharply. Fishing vessel insurance under Decree 67 was only implemented in the last 2 quarters of the year, so revenue decreased significantly. The original compensation rate decreased compared to the same period and mainly focused on fishing vessel insurance under Decree 67. There were some total losses of vessels with VR SB registration level not suitable for coastal operations. Cargo business is still effective due to good control of insurance acceptance and loss prevention.[31, p.48]

In 2017, the human insurance business continued to grow steadily and the most compared to other businesses. The insurance sales channel through credit institutions and banks was also maintained and developed with a strong growth rate compared to the traditional insurance channel. Although products such as student insurance and health care insurance had fierce competition from insurance companies, Bao Minh still achieved revenue of 1,224 billion VND, exceeding 125.93% compared to 2016.

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