Market Share of Insurance Companies by Premium Revenue of Contracts in Effect in 2004 and 2005 [20]

professional. Bao Viet has established its own Training Center, which has trained and certified tens of thousands of insurance agents. Foreign-invested insurance companies such as Prudential or AIA have all partnered with prestigious insurance training organizations in the world to train and develop their employees such as ANZZIP Organization of Australia, LOMA of the US. Therefore, the level of insurance staff has been improved and professionalized. In addition, companies have also actively deployed and successfully applied the testing system of insurance contract management database, accounting software system. Some companies, of which Bao Viet is the pioneer, have announced and put into use the Website, promptly promoted the types of services, built an electronic insurance system connected via the Internet to widely serve all customers.

Because life insurance has just been implemented in Vietnam and is still very new to the people, insurance companies are aware of the importance of advertising and propaganda. To promote their businesses, the mass media are the first choice of businesses. In 2001, 2002 and 2003, advertising programs of life insurance companies continuously appeared on television, newspapers and other mass media. Currently, when talking about Bao Viet, people can immediately think of the slogan "Bao Viet for the future of Vietnam" or "Bao Viet in the hearts of Vietnamese people", or when talking about Prudential, they think of "Always listening, always understanding", or AIA is "Choose to trust"... It can be said that the image of life insurance companies and life insurance products are gradually imprinted in the minds of the people. In addition, life insurance companies are also very successful in implementing humanitarian or community education programs. From there, the company's reputation is increased, the understanding and trust of the people in life insurance are increased. For example: AIA implements a program to give traffic safety helmets to high school students, Prudential, Bao Viet... support the fund for the poor. To improve service quality, create the best care for customers, life insurance companies always improve service work.

Customer services such as giving gifts, sending birthday greeting cards... What life insurance companies have been doing not only increases the company's reputation, but also creates a mindset, a habit of participating in insurance, an important factor promoting the development of the Vietnamese life insurance market.

With 8 years of insurance companies up to the end of 2005, the Vietnamese life insurance market has been fiercely competitive. When losing its monopoly in 1999, Bao Viet's market share has continuously decreased. Data ( Table 2.10) shows that in 2004, Bao Viet's market share according to premium revenue of valid contracts decreased to 39.47%, and by 2005 it had further decreased to 38.01%. Currently, Prudential's market share has risen to the top. In recent years, Prudential's market share has continuously increased in accordance with the company's strategy of becoming the market leader. To achieve this goal, Prudential has made many efforts, from improving the professional capacity of agents and insurance staff to increasing business capital. Up to now, Prudential's charter capital is 75 million USD, ensuring financial capacity for Prudential to continue expanding the market and increasing market share.

Table 2.10: Market share of life insurance companies by premium revenue of valid contracts in 2004 and 2005 [20]

DNBH

2004		2005
Revenue (billion VND)	Market share (%)	Revenue (billion VND)	Market share (%)
1. Bao Viet	3043	39.47	3050	38.01
2. Prudentail	3104	40.25	3296	41.08
3. Manulife	889	11.53	872	10.87
4. AIA	463	6.01	520	6.48
5. Bao Minh/CMG	212	2.74	285	3.55
Total	7711	100	8023	100

Maybe you are interested!

Manulife is the third company. Manulife's current strategy is not to lead the market, but to focus on product quality. Therefore, Manulife is the only company in the market that has announced profitable operations, and is also the company with the lowest contract cancellation rate.

AIA and Bao Minh/CMG are in the bottom two positions in the market. The reason here is not because AIA and Bao Minh/CMG are two weak companies. This is the strategy of the two companies wanting to develop moderately, waiting for the market to develop and have more favorable conditions before proceeding with strong business.

If we consider the market share of companies in the life insurance market based on new contract premium revenue, by 2005, Prudential's market share had surpassed Bao Viet's and become the market leader. And in 2005, Prudential's market share was 46.22%, Bao Viet's was only 27.38%, AIA rose to third place with 9.92%, followed by Manulife and Bao Minh/CMG (Figure 2.1) .

Chart 2.1 : Market share of life insurance companies by premium revenue

Newly Exploited Insurance Premium Revenue in 2004 by Business

28.42%

5.17%

8.58%

12.76%

45.07%

new mining contracts in 2005 [20]

unexpected, 46.22%

Bao Viet, 27.38%

Manulife, 8.28%

BM CMG, 8.20%

AIA, 9.92%

2.3.3. Network operations

To bring products to the market, currently life insurance companies mainly use traditional distribution channels: professional agents. This is the key sales force that brings the majority of contracts to the companies. In recent times, companies, first of all Bao Viet Nhan Tho, have built a service network covering the whole country to meet the needs of all classes of people. With a network covering all provinces, districts and a large team of agents and exploitation staff, life insurance products have penetrated every corner from urban to rural areas. If in 1997 there were only less than 1,000 agents and by the end of 2005 there were over 95,000 agents operating in the life insurance field. In addition, the organization and management model of agents of life insurance companies is increasingly complete and operates effectively, typically specializing in exploitation and fee collection.

In addition to the team of professional agents and collaborators, recently, insurance companies have also expanded their distribution channels by cooperating with commercial banks in exploiting and collecting insurance premiums. Typical examples are the cooperation between Bao Viet and the Industrial and Commercial Bank, between AIA and the Hong Kong & Shanghai Bank, Prudential and ACB. Up to now, this cooperation has achieved certain results. And this cooperation also shows signs of mutual penetration between the two industries, signaling the formation of an insurance bank in Vietnam in the near future. In addition, life insurance companies have also been aware of using distribution channels via the internet, introducing products online. The first was Manulife in 2001 with the first website, followed by AIA, and up to now, most companies have their own websites to serve customers with all information about the company and its products. The diversification of distribution channels of insurance companies has created favorable conditions for people to access life insurance products, and promoted the development of the life insurance market.

2.4. Achievements and limitations

2.4.1. Results achieved

Thus, after 10 years of operation, the Vietnamese life insurance market has truly entered a new phase and has achieved some encouraging results in many aspects, which further affirms its important role in the socio-economic situation. Specifically:

- Although still in its early stages of implementation, the Vietnamese life insurance market has made quite strong developments, demonstrated through high growth rates in premium revenue, number of contracts, number of insured customers, widespread agent network development... creating the premise for the further development of the market.

- Life insurance has contributed to creating a stable and prosperous life for the Vietnamese people, raising people's awareness of life insurance. By fully and promptly resolving customer benefits, life insurance companies have helped customers quickly overcome risks and stabilize their lives. At the same time, it also helps customers make long-term and regular savings to achieve their financial goals, gradually forming the habit of participating in life insurance in Vietnam, which is also the fundamental reason for the success of the market in recent times. At the same time, with the mechanism of financial compensation, overcoming the consequences of risks, providing financial support when no longer able to work, life insurance has actively contributed to eliminating subsidies, reducing state and social subsidies for individuals facing risks, and contributing to the socialization of social guarantees. In addition, insurance companies also actively participate in charity activities, sponsor cultural and sports programs, medical consultation, training support, traffic safety and other social activities, contributing to building a peaceful, stable and prosperous society, enhancing the reputation and image of the life insurance industry.

- Life insurance creates a channel for capital mobilization for the economy, promoting socio-economic development. With this function, life insurance has mobilized idle money from the population to form a centralized monetary fund. In which, the unused part of the fund is used for investment, providing capital for the economy, especially medium and long-term capital, effectively serving the industrialization and modernization of the country. Compared to the banking industry, although Vietnam's life insurance has been operating for a very short time, it has truly become a very effective channel for capital mobilization and distribution for the economy. With increasingly large reserve capital, life insurance companies can make investments in the form of joint venture capital contributions, stock purchases, loans, participation in investment projects, stock purchases, bonds, etc. In fact, life insurance companies have participated in many investment projects, are major shareholders in many joint stock companies, and are also regular members in bidding for treasury bills and bonds, and are also "big players" in the stock market.

- Life insurance has solved many jobs for workers. In the past, life insurance has attracted and created jobs for a large number of workers in the form of professional agents, semi-professional agents and collaborators. By 2005, the number of agents operating in the life insurance field was over 95 thousand agents, creating jobs for nearly 100 thousand people. With outstanding characteristics: completely independent, self-managed in time, requiring high self-awareness, receiving remuneration according to work results. Life insurance has truly become a profession recognized by society and a profession with a fairly high income in Vietnam today.

However, the life insurance market has made significant progress, but compared to the development potential of the life insurance market and the need for socio-economic development in the context of international integration and globalization, the life insurance market still shows limitations.

2.4.2. Limitations

Besides the achieved results, the Vietnamese life insurance market in

There are still many limitations in the past. There are 3 major limitations that need to be mentioned, which are:

2.4.2.1. The life insurance market has not met the requirements of socio-economic development in the current transitional economic conditions of Vietnam.

Although the Vietnamese life insurance market has grown strongly in recent years, with premium revenue growth higher than GDP growth, its scale is still small and has not fully exploited the market potential. This is reflected in the ratio of insurance premium revenue to GDP, which has increased but is still low compared to the region and the world. As of 2005, the total premium of the entire Vietnamese insurance market compared to GDP was only about 1.76%, much lower than that of other countries in the region (Singapore 6.00%, Taiwan 6.90%) and the world average of 8.00%. If we consider the life insurance market alone, the market's contribution to GDP in 2004 was 1.07% and in 2005 it was 1.04%.

Vietnam's population by the end of 2005 was about 83 million people. Meanwhile, at the end of 2005, the total number of valid life insurance contracts was only over 4.9 million contracts. That is, the life insurance market has only exploited nearly 6% of the market's potential. Because the proportion of insurance participants is still small, when an insurance event occurs, the rate of receiving insurance benefits is still low, not really meeting socio-economic needs. For example, in the fire at the Ho Chi Minh City Trade Center in October 2002, the loss of life due to death and injury was up to 160 people, but only 40 people were insured. In our country today, most of the losses or financial needs that people encounter are supported by the State budget or borne by the people themselves. People have not been able to share difficulties with other members of society through insurance. In the context that our country is moving to a market economy, eliminating

With the removal of state subsidies, people face many financial difficulties such as medical expenses, children's tuition fees, etc., so the demand for life insurance is very large. However, with such a low exploitation rate, it is clear that it does not meet the needs of society.

In recent years, although the total market insurance premium revenue has increased, the insurance amount and new premium revenue have tended to decrease. The data ( Table 2.11) shows that the insurance amount in 2004 was 21,879 billion VND, and by 2005 it had decreased to 20,626 billion VND. The new premium revenue in 2004 was 1,639 billion VND, and by 2005 it had decreased to

1,348 billion VND.

Table 2.11: Number of contracts, insurance amount, new insurance premiums in 2004 and 2005 [20]

Product Group

Contract number (thousand contracts)		STBH (billion VND)		Insurance premium (billion VND)
2004	2005	2004	2005	2004	2005
1. Lifetime insurance	12	5	565	331	24	10
2. Life insurance	2	1	105	28	47	2
3. Term life insurance	18	34	793	1,654	6	27
4. Mixed insurance	759	575	20,400	15,452	1,516	1,226
5. Periodic payment insurance	3	205	16	3.162	66	84
Total	794	820	21,879	20,626	1,639	1,348

In addition, the life insurance market is also facing an increasing number of contract cancellations. Data ( Table 2.12) shows that in 2005, the total number of canceled contracts was 747,254. Of which, the number of canceled contracts in the first year was 331,059, accounting for 4.5% of the number of effective contracts; the number of canceled contracts in the second year was 220,070, accounting for 2.99%; the number of canceled contracts in the following years was 196,125, accounting for 2.66% of the total number of effective contracts.