New Exploitation Situation in Korean Insurance Market, Period 1996-2000 [18]

By the end of 2000, there were 21 life insurance companies operating in the Korean life insurance market, including branches of foreign life insurance companies. In addition to domestic life insurance companies, there are also big names in the world such as Prudential, NewYork Life, MetLife, AIA, etc.

After the Korean Ministry of Finance officially announced the debt relief for insurance companies affected by the 1997 financial crisis, the Korean insurance industry immediately made efforts to restructure 10 bankrupt insurance companies and transform a loss-making company into a state-owned insurance company. In October 2000 and January 2001, Samshin and Hyundai Life Insurance were reorganized into two strong insurance companies in the Korean insurance market. The Korean Government's Financial Supervisory Board also granted licenses for the two companies to resume operations. In April 2001, in an effort to continue building a large insurance group, the two companies were once again merged into Korea Life Corporation, the largest insurance company in Korea.

The restructuring of the Korean insurance industry after the 1997 currency crisis resulted in the presence of 13 new insurance companies in the market, including one state-owned enterprise, one insurance group, and one insurance company undergoing reform. By the end of 2003, there were 23 life insurance companies in the Korean insurance market (including three branches of foreign insurance companies).

+ New exploitation results in the period 1996 - 2000:

In the Korean life insurance market, insurance products are divided into two main groups: individual insurance and group insurance. Individual insurance includes: pure mixed insurance (such as life annuity products, children's education programs); term insurance (including sickness insurance products, term life insurance, whole life insurance); mixed insurance (including short-term savings insurance products). Group insurance is mainly a retirement insurance product for employees.

The summary of the Korean life insurance market situation in the period 1996-2000 shows that the number of new contracts continuously increased, from 13.692 million contracts in 1996 to 18.732 million contracts in 2000 (Table 1.7). The total STBH also increased from 253.7 trillion won in 1996 to 302.5 trillion won in 2000 (1 trillion won = 1 billion USD). However, the average STBH per contract tended to decrease, from 19 million won in 1996 to 16 million won in 2000.

Table 1.7 : New exploitation situation in Korean life insurance market, period 1996-2000 [18]

Target

1996	1997	1998	1999	2000
1. Newly exploited insurance contract number (million contracts)	13,692	17,119	17,514	17,945	18,723
2. Total STBH (trillion) won)	253.7	281.1	289.1	265.6	302.5
3. Average STBH per contract (million won)	19	16	17	15	16

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China Life Insurance Market:

For nearly 50 years, the Chinese insurance industry has been a monopoly – with only one state-owned insurance company operating in the market – the People’s Insurance Corporation of China (PICC). Since 1992, when China signed the General Agreement on Tariffs and Trade (GATT), China’s insurance industry has really developed. The Chinese government has introduced a policy of giving priority to granting licenses to domestic insurance companies, while foreign insurance companies are only granted licenses “gradually”. As a new business field, life insurance companies are given priority in granting licenses compared to non-life insurance companies. China’s life insurance industry has therefore made steady progress. From 1 initial insurance company (doing both life insurance and non-life insurance), currently there are 27 companies operating in the Chinese life insurance market (including 9 domestic life insurance companies, 17 joint venture life insurance companies and 1 100% foreign-owned life insurance company).

China is considered the country with the highest growth rate in life insurance premium revenue in the world (25,550 times - from 96,700 USD in 1982 to 2.5 billion USD in 1995). By 2002, China's life insurance premium revenue was 25 billion USD, accounting for 1.6% of the world market share, compared to 2001, the growth rate of China's life insurance was 61%.

The development of life insurance has changed the structure of the Chinese insurance industry. If in 1990, life insurance premium revenue accounted for 27.6% of total insurance premiums, then in 2002 this ratio was 74.5%. The proportion of life insurance premium revenue in GDP increased from 0.28% in 1990 to 2.24% in 2002.

The recent boom in Chinese life insurance is partly due to the increased demand for participating products. In the Asian life insurance market, traditional non-participating life insurance products used to dominate, but since the introduction of investment-linked policies in 1999 by Ping An Insurance, the demand for investment-linked and participating products has increased rapidly. However, in the Chinese life insurance market, non-participating products still dominate (61.2%), while investment-linked and participating products account for 26.6% of the market share.

The rapid development of the Chinese life insurance market has led to a rich variety of life insurance products. Previous generations of life insurance products competed fiercely with deposit products of commercial banks. When the Chinese insurance regulator set a maximum rate of 2.5% for long-term life insurance products, insurers responded by introducing investment-based products and participating products.

With a high savings rate (40% of GDP), along with the government reducing its role as a health care provider and pension fund, China's life insurance industry is considered to have a lot of room for growth.

After more than two decades of implementation, Chinese life insurance has made strong progress. In just two days, December 17 and 18, 2003, the stock prices of Chinese life insurance companies attracted the attention of experts. On the Hong Kong Stock Exchange, the stock prices of Chinese life insurance companies increased by 23%, from HK$2.95 to HK$4.7. On the New York Stock Exchange, the situation was even more exciting, the stock prices of Chinese life insurance companies increased by 27%, from $16.8 to $23.7. The number of shares offered for sale increased 25 times. In the three years from 2001 to 2003, China's life insurance market share increased by 33% per year and accounted for 68%. This proves that the Chinese life insurance market is a fertile market. As of 2003, only 10% of the Chinese population participated in life insurance.

Lessons learned from studying emerging life insurance markets:

Through studying life insurance activities in emerging markets, from the success of Korea, China as well as the underdeveloped situation of the Russian life insurance market, we can draw the following lessons:

 Political stability, economic growth, and controlled inflation are essential conditions for the development of the life insurance market.

 The State needs to develop a tax policy that both encourages the development of life insurance and limits the use of insurance services to avoid obligations to contribute to the State.

 Large population creates basic conditions for the development of the life insurance market.

 Investment environment is a very important factor for the development of life insurance.

 It is necessary to open the Insurance market but it must be limited in stages and a system of legal documents must be built to regulate Life Insurance business activities.

Chapter 2

The current situation of Vietnam's life insurance market in recent years

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2.1. Overview of the formation and development process of the life insurance market in Vietnam

2.1.1. Period before 1996

Insurance is an objective necessity of human beings and was born from

very long time ago in the world. However, in Vietnam, insurance in general and life insurance in particular were born relatively late. The birth and development of the insurance industry is closely linked to the historical events of the country.

After 1954, our country was divided into two regions, the South and the North. During that same period, the North carried out the construction of socialism. The infrastructure and economic organizations of the Democratic Republic of Vietnam were established one after another, forming a state-owned economic system that increasingly played an important role in the socio-economic system. Economic activities and new management requirements urgently required financial mechanisms and mechanisms to ensure asset safety for the economy. Therefore, since 1963, the Ministry of Finance has conducted research and promoted the establishment of the Vietnam Insurance Company with the cooperation of the People's Insurance Company of China.

On December 17, 1964, by Decision No. 179/CP of the Government Council, at the request of the Minister of Finance, Vietnam Insurance Company, trading name Bao Viet, was established and officially opened for business on January 15, 1965 with a charter capital of 10 million Vietnamese Dong (equivalent to 2 million USD at that time), under the direct management of the Ministry of Finance. During this time, Bao Viet only deployed non-life insurance, not life insurance. However, Bao Viet also focused on

Expand and diversify insurance services, especially insurance services

human insurance, as a premise for future life insurance implementation.

After more than 10 years since the reunification of the country, the national construction in our country has achieved certain results. However, the centralized, bureaucratic and subsidized mechanism has also revealed many limitations, hindering the development of our country's economy. The price and wage policies are no longer suitable, causing serious inflation, making people's lives difficult, and the political situation at home and abroad has changed dramatically, requiring us to make changes.

On December 22, 1987, the 8th National Assembly of the Socialist Republic of Vietnam, 2nd session, passed the Law on Foreign Investment in Vietnam, creating an important legal basis for the policy of opening the economy to foreign markets, opening a new period of development for the country's economy.

The open-door policy in 1986 created conditions for the Vietnamese insurance industry to learn and access new insurance techniques in the world. From the experience of other countries, Bao Viet, at that time the only insurance company in Vietnam, saw the great potential of life insurance in our country. Therefore, Bao Viet had a research topic " Life insurance and its application in Vietnam ". In this topic, the research team synthesized the basic theories that world life insurance had applied, and analyzed the conditions for implementing life insurance. However, the topic stated that implementing life insurance at that time was not appropriate. Vietnam's socio-economic conditions at that time had many disadvantages, specifically:

+ High inflation rate

+ The income of the majority of the population is still low

+ There is no environment for insurance companies to operate.

+ There is no legal environment in the field of life insurance.

Entering the 90s of the 20th century, inflation was quickly controlled, people's lives were stabilized, thereby creating demand for

participate in insurance. To facilitate the development of the insurance industry, to better serve the needs of socio-economic development, and to contribute to the implementation of the country's 1991-2000 economic strategy, the Government issued Decree 100/CP on December 18, 1993, allowing the establishment of insurance companies belonging to other economic sectors, ending Bao Viet's monopoly in the market, marking a major turning point in the development of the Vietnamese insurance industry. Right in 1994, after the issuance of Decree 100/CP, a number of insurance companies were established such as PJICO, Bao Minh, Bao Long. But these are all non-life insurance companies.

2.1.2. Period from 1996 to present

Based on the assessment of the conditions for implementing life insurance considered to be ripe (such as a significant increase in per capita income, a relatively stable economic development, and a large population), the Ministry of Finance signed Decision No. 281/QDTC on March 20, 1996, allowing the implementation of the first two types of life insurance in Vietnam, namely: term life insurance and children's insurance . Then, due to the requirements for life insurance fund management, on June 22, 1996, the Ministry of Finance signed Decision No. 568/QD-TCCB to establish the life insurance company Bao Viet Nhan Tho, under the Vietnam Insurance Corporation. The birth of Bao Viet Nhan Tho marked a new turning point in the development of the Vietnamese insurance industry. Affirming the right direction in the cause of building and developing the country.

The year 1999 marked an important milestone in the development of the Vietnamese life insurance market. Realizing the great potential of the Vietnamese life insurance market, many foreign life insurance companies registered to operate in Vietnam. And by 1999, three foreign-invested life insurance companies were granted operating licenses by the State, namely: Chinfon-Manulife Life Insurance Company Limited (currently Chinfon has sold all its shares to Manulife and changed its name to Manulife Life Insurance Company Limited),

Bao Minh-CMG (a joint venture between Bao Minh and CMG Group), and the Company

Prudential UK Life Insurance.

By 2000, another 100% foreign-invested life insurance company was allowed to establish and operate in Vietnam, which was American International Life Insurance Company Limited (AIA). Thus, it can be said that at this time, the Vietnamese life insurance market was truly formed. Competition did not take place between domestic companies as in non-life insurance, but was fierce competition between foreign-invested companies.

From 2001 to present: This is the period when the country continues the period of innovation, economic reform goes into depth and achieves many important results. The economy develops stably, with an average growth rate of 6.9% and single-digit inflation. People's lives have improved significantly, with per capita income increasing from 300 USD in 1996 to 430 USD in 2001 and over 500 USD in 2003. These are favorable socio-economic conditions that promote the development of the Vietnamese life insurance market.

At the same time, to create conditions for the Vietnamese insurance industry to develop sustainably, the 8th session of the 10th National Assembly of the Socialist Republic of Vietnam passed the Law on Insurance Business and this Law took effect from April 1, 2001, creating a legal corridor for insurance business activities in Vietnam, including life insurance.

In addition to Bao Viet Life and four foreign-invested life insurance companies established before 2000, the Vietnamese life insurance market by the end of 2005 had three new companies, all of which were 100% foreign-invested, namely: Prévor Life Insurance Company Limited, ACE Life Insurance Company Limited, and New York Life Insurance Company Limited. It can be said that the Vietnamese life insurance market is gradually integrating with the regional and world life insurance market.

2.2. Factors affecting the life insurance market in Vietnam in recent years

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