Personal accident insurance provides basic coverage for accidental injuries and can reimburse medical expenses due to accidents, receive hospitalization benefits to help cover treatment costs, and lump sum payment reimbursement for accidental death. Health insurance, on the other hand, usually pays for medical, surgical, and pharmaceutical expenses for the insured person. It can reimburse the insured for expenses incurred due to illness or injury, or pay directly to the medical institution. At present, personal accident insurance occupies a large market share, and its market value has reached 318.07 million US dollars.
Vietnam's personal accident and health insurance industry market can be divided into direct sales, agency, bancassurance, e-commerce, and others according to distribution channels. Among them, direct sales is the most valuable sales channel in the personal accident and health insurance markets, accounting for 35.23% of the market share in 2019.
Analysis of the market status and prospects of Vietnam's personal accident and health insurance industry
The total market value of Vietnam's personal accident and health insurance industry was US$241.65 million in 2015, which increased to US$499.09 million in 2020. It is estimated that the value of the Vietnam personal accident and health insurance industry market can reach 1524.2 million USD by 2027. Vietnam's personal accident and health insurance industry market grew at a CAGR of 17.45% from 2019 to 2027.
Southern Vietnam is the largest revenue market for the industry, with a market share of 37.40% in 2015 and 38.78% in 2020, up 1.38% year-on-year. In 2020, the market share of Northeast Vietnam was 29.44%, ranking second.
The Mekong Delta is located in the south of Vietnam and is one of Vietnam's major economic regions. The rapid economic development and abundant young labor resources will become a new driving force for the development of the personal accident insurance and health insurance industry. It is expected that by 2027, its market value will reach $626.28 million, and its market share will also expand further.
The diverse geography of Northeast Vietnam has contributed significantly to economic success. In recent years, the region's rapid economic growth has attracted some foreign investment, the pace of industrialization has developed relatively fast, and many enterprises in the field of energy technology have been established. Its market value is expected to increase to $440.68 million by 2027 from $146.91 million in 2020.
Economic development in central Vietnam is uneven. Among them, the economy of the central highlands is relatively small, and the economy is mainly based on agriculture, while the economy of the central and northern coasts and the central and southern coasts is relatively developed, attracting many domestic and foreign investors to invest. Its market value is expected to grow to $278.6 million by 2027.
Opportunities and challenges for the future of Vietnam's personal accident and health insurance market
In contemporary society, a large part of the population suffers from various chronic diseases such as heart disease, diabetes, and cancer, among others, which are common among the Vietnamese population. Many Vietnamese insurers have launched new health insurance products to protect their customers from financial losses due to non-communicable diseases. While agencies and brokers have traditionally been the most popular distribution channels for personal accident and health insurance in Vietnam, bancassurance and e-commerce are also growing at a healthy rate. Bank agents have increasingly become an important sales channel, and Vietnam allows banks to enter into one-to-many sales agreements with insurance companies.
Many commercial banks have signed insurance contracts with more than two insurance companies. In addition, Vietnam's growing population and economic development are expected to further drive the demand for personal accident and health insurance. In the past decade, Vietnam's insurance industry has transformed from a state-owned monopoly to a more open industry, and many foreign insurance companies have begun to enter the Vietnamese market. The increased participation of foreign insurers in the field of personal accident and health insurance in Vietnam has increased the competitiveness of the sector and is conducive to the development of the market.
The Vietnamese government is also implementing a nationwide universal healthcare system, which will provide subsidized health insurance for low-income groups, but this may dampen the growth of private health insurance companies. As more and more companies start to enter the industry, the competition will become more and more fierce, which will also pose a threat to the existing market share. At the same time, due to the impact of the new crown epidemic, many people's income has decreased, and even unemployed, and the demand for insurance has also decreased, which will affect the development of the personal accident insurance and health insurance industry market in Vietnam.
However, with the gradual control of the epidemic, the recovery of stable social and economic development, and the continuous improvement of people's understanding of the benefits of insurance, the Vietnamese personal accident and health insurance industry market still has great potential for development. Some of the leading insurance companies are launching innovative and suitable products and developing multiple distribution channels to expand their own sales. Regulators are also working to improve transparency and industry standards. Although the current level of market development is not high, Vietnam's insurance demand will usher in a period of strong growth due to Vietnam's economic growth potential and the gradual improvement of people's living standards, as well as the acceleration of the aging of the social structure.