Vietnam Insurance Information
CIA link to demographic/economic data on Vietnam
Scroll down to see Updates & Additional Information
General Vietnam Insurance Information
- Compulsory Insurance:
- Third Party Automobile Liability
- Employer’s Liability
- Non-Admitted Insurance:
Prohibited.
- Policy Wordings & Rates / Tariffs Controlled:
Guidelines are recommended by Vina Re – the National Reinsurer. Otherwise no tariffs in place.
- Policy Language:
Vietnamese.
- Types of Insurance Restricted to Government Institutions:
- Policy Currency:
dong (VND)
- Currency Restrictions / Exchange Controls:
None.
- Policy Period:
Annual – normal practice.
- Cancellation Provisions:
30 to 90 days notice – either party.
- Premium Taxes, etc. paid by Insured:
All classes of non-life business with the exceptions of personal accident, travel and health insurance are subject to VAT at a rate of 10% on the gross premium. No other taxes, stamp duty or charges are levied.
- Insurance Companies:
Foreign insurers can now be licensed. 100% foreign ownership now allowed.
- Brokers:
Brokers pay insurers per individual agreements – usually 60 to 90 days.
- Brokerage Commissions:
- Broker of Record Letters:
- Reinsurance:
Reinsurance used extensively due to local limited capacity. Compulsory 20% cessions on all classes to National Reinsurance Vina Re.
- Local Natural Hazards:
Hurricane/Typhoon.
- Other Information:
Property Insurance
- Fire:
Standard perils for material damage, legal liability, loss of profits and inland transit available.
- All Risk:
- Coinsurance:
Allowed with locally licensed companies only.
- Blanket Insurance:
- Business Interruption:
- Replacement Cost:
- Discount for fire protection equipment / systems:
Boiler & Machinery / Machinery Breakdown / Engineering
- Wordings:
Third Party Liability, Machinery Breakdown and Erection coverages available. General / Public Liability
- Available Wordings:
- Comments:
Automobile / Motor
- Compulsory Limits:
The minimum sum insured is $1,500.
- Comments:
Third Party Liability Insurance is compulsory for all motor vehicles except motor bikes under 50cc.
Workers’ Compensation
- Comments:
Per Labor Code January 1, 1995, the employer is responsible for all medical, dental, eyecare and accident benefits for up to one year.
Workers’ Compensation is not compulsory but employers must reimburse employees for all costs in accordance with the Labor Code.
Marine
Crime
Updates & Additional Information:
Vietnam
Most people have a fair idea about the history and geography of those countries which play leading roles in the world’s economy and international politics. In the insurance world the same could be said about the extent of our understanding of what is happening in some of the smaller countries on the planet where, for various reasons, the development of insurance and its impact on global business have not been spectacular.
Vietnam probably falls into this category but, as usual, when one takes a closer look, it is reassuring to see that the market is growing, there is an increasing level of sophistication and the larger foreign players are lining up to take a piece of the action.
General History
A couple of thousand years ago, the people who inhabited the region between Canton (as the English called Guangdong province) and the Red River basin (main city, Hanoi) objected to plans to merge into a “Greater China” and started moving southwards. Amongst other things this led to intermingling with other groups and the basis of a mixed ethnic Vietnamese identity started. From a linguistic point of view, one can also trace developments: Mon-Khmer, Tai and Chinese are key elements in the development of the language. Although romanised/western style script introduced by the French has been widely introduced for over 100 years and now forms the basis of the official written Vietnamese language, the use of Chinese characters and script remains to this day, albeit only for ritual and celebratory purposes.
Taking a large step to the 1700’s the fusion, conflicts and separation of peoples has led to the moulding of the Vietnamese people as we know them today. There is Chinese, Champa and Khmer blood in their make up, as well.
Up until this time, China had continued to play a dominant role in the country and this was evidenced by Chinese style rule with a central authority supported by local mandarins and an emphasis on agriculture (rice) and fishing, rather than the production of goods from plentiful resources such as wood from the vast and lush forests. By 1800 Vietnam had created its own, and the most advanced legal system in south east Asia, promoted art, literature and education and modernised its agriculture. Throughout the country’s history there has been division, reunification, division and so on but gradually besides Hanoi, Saigon became the other main city, along with Da Nang and Haiphong.
As the western world became interested in the Orient, Portuguese and French missionaries and traders came to Vietnam and many thought it was a possible entry point into China. In 1857 France invaded Vietnam to secure its need for overseas markets and expand its share of Asian territories. Vietnam was merged into France’s Cochinchina. This was not a happy time and after several attempts the French were beaten at the battle of Dien Bien Phu in 1954. It was the communist forces from the north which led to the demise of France as an invading master. This led to the creation of the two Vietnams: North and South. America had supported France in it attempts to resist the spread of communism and in 1965 they opened up direct warfare by bombing Hanoi. A tragedy for all, the war lasted until 1973 when a peace treaty was signed. Two years later the South fell to the North’s forces and not long after Saigon fell, its name was changed to Ho Chi Minh City. The capital remains Hanoi.
The Insurance Market
There are currently 30 insurance companies operating in Vietnam: half of them have foreign investors – some of them are 100% foreign owned. The 14 domestic companies handle more than 80% of local business (including all of the compulsory lines such as Fire/Explosion and Motor liability). The foreign companies have an advantage with IT and systems and procedures to maintain underwriting discipline and next year when certain WTO restrictions are lifted the domestic companies will find competition stiffening even more. By 2012 it is anticipated that foreign insurers will be allowed to develop a branch structure to distribute their products.
It is forbidden to cover risks located in Vietnam on a non-admitted basis. Amongst other things, this is to protect local insureds and to ensure payment of local taxes (10% VAT on all classes except life, accident and health). Products are distributed through insurance company agents and independent brokers. Insurance, reinsurance companies and brokers are regulated by an insurance department, a division of the Ministry of Finance.
Vietnam – Some Basic Facts
Population - 85 million
Non-life premiums for 2007 (anticipated) - US$500 million
Life premiums for 2007 (anticipated) - US$575 million
Percentage of world premiums - 0.03%
February 2008