The Vietnam National Reinsurance Joint Stock Corp (Vinare) said that Vietnam's non-life insurance market in the first nine months continued posting a good growth of 25% against last year. However business results failed to meet expectations because management and development expenses remained too high. Many kinds of services such as fire and explosion insurance, and automobile cover insurance reported big losses.

According to the Vietnam Insurance Association, the technical insurance registered an average loss rate of 47.6% a year within nine-years between 1999 and 2007 while the compensation rate was 49.87% in 2006 and 98.45% in 2007. On the contrary, the insurance premium rate went down, failing to conform to insurance responsibilities.

Similarly, the fire and explosion insurance booked an annual average loss rate of 35.6% within 10 years between 1998 and 2007, while the compensation ratio was 76.06% in 2006 and 48.08% in 2007. In the first nine months, the country saw dozens of big fires, six of which caused losses worth over US$12 million. Meanwhile, the premium ratio was increasingly going down. The average insurance premium ratio in 2007 reduced by 30% against 2005 and 2006, the lowest rate within the last 10 years.

The Vietnam Insurance Association reported that insurance brokers have drafted various insurance policies with different terms and conditions and lower insurance. Some projects were divided into different bid packages, different construction items so that different insurance businesses could participate with different deadlines and premiums for some basic risks.

That the fire and explosion insurance requires insurance buyers to hold fire and explosion prevention certificates restricted businesses from buying insurance.

Many insurance experts pointed out that in order to ensure healthy development as well as safe operations, Vietnam's non-life insurance companies should take urgent measures, namely, streamlining insurance activities, seriously following regulations of the finance ministry, commitments of insurance businesses and others.

Dau Tu Chung Khoan - November 6, 2008