MB Ageas Life: ‘Life insurance market in Vietnam is of huge potential’
According to Mr. Vu Hong Phu, President of the Executive Committee of MB Ageas Life Insurance Joint Venture, the opportunities for life insurance business in Vietnam remain so great with about 30 million people of average income or higher.
Three (3) joint-venture partners of MB Ageas Life Insurance Company Limited (MB Ageas Life) are: Military Commercial Joint Stock Bank (61%); Ageas Group (29%) and Muang Thai Life Assurance Public Company Limited (10%) with charter capital of VND 1,100 billion. MB Ageas Life came into being in March this year.
It was stated by Mr. Vu Hong Phu that as the 18th insurer entering the Vietnamese insurance market, but with a commitment to transparency and trustworthiness in its operation together with reputation and experience of the joint venture partners, MB Ageas Life will satisfy any insurance customers.
- How do you see the life insurance market in Vietnam?
- Currently in Vietnam, only 8% of the population have life insurance products, equivalent to 6 million people. This figure is so modest compared to that of some countries in the region such as: about 85% in Singapore, more than 80% in Thailand, 75% in Malaysia etc.
In addition, according to our survey, about 30 million people in Vietnam currently belong to the middle class and up. As predicted, by 2020 roughly 40 million people earn over VND 15 million per month, resulting in huge market place for this sector.
Given the capacity to penetrate the insurance market, in 2016 the global average growth rate of life insurance was about 5.4%, for Asian countries alone, the figure was as high as around 20%; while Vietnam maintained a stable growth rate (around 30%). In 2016 alone, the life insurance market in Vietnam grew by 35%. This is a huge potential for life insurers in general.
- So, what is the biggest challenge facing life insurers, sir?
- Apart from the general difficulty in terms of knowledge, the biggest challenge is how to build trust and credibility with the customers. When purchasing a life insurance product, the customers are obliged to pay over a long period of time.
Mr. Vu Hong Phu - President of the Executive Committee of MB Ageas Life Insurance Joint Venture.
Unlike buying a pure investment product, customers who have confidence in insurance products also want to protect themselves and their relatives from potential risks in the future so if the customers do not have faith in the insurance products and operations of the insurers, it will not be easy for them to approach any life insurance company. In other words, life insurance is of long-term nature, sometimes life-long; therefore, faith plays a crucially important role.
The history of life insurance in the world has gone through 300 years, but in Vietnam, the field has experienced only 22 years of development. Even, there are customers who purchased products from the very first day when the life insurance was marketed, but not until now do they receive their maturity benefits . Therefore, we enter the market after thorough research on this issue and we are determined to earn the trust of customers.
- A Joint venture is characterized by general constraints on development objectives and strategies. So how will MB Ageas Life joint venture deal with this?
- First, MB plays the leading role in the joint venture when it owns 61% of the total charter capital of MB Ageas Life. One of the advantages that MB Ageas Life has inherited is the brand reputation of Military Bank, where customers, shareholders and partners are committed to long-term and sustainable engagement.
MB Ageas Life operates on the principle of respect for partners, transparent management, positive learning, acquisition of knowledge, technology and experience in insurance business from foreign partners. As a result, we have reached high consensus on opting for development of Bancassurance as the primary sales channel in our early years business strategy.
Regarding medium and long term strategies, we will gradually develop a variety of sales channels, in which the development of traditional agency channel and electronic technology-integrated sales channels, in addition to Bancassurance, will also be facilitated.
Second, when building the corporate culture, transparency is one of our core values. We see this as one of our fundamental commitments in order to build customers’ trust with MB Ageas Life.
Third, with respect to the products and services, the company has chosen the simplest approach to help the customers have a clear understanding of the products, with focus on the customers’ benefits and we are committed to accompanying our Customers in settlement of benefits when life risks such as accidents, illnesses, deaths etc. occur.
- How is MB Ageas Life going to make use of advantages from the two foreign partners?
- Our biggest foreign partner is Ageas, which is a major financial and insurance group of the top 20 biggest insurance companies in Europe, with nearly 200 years of life and non-life insurance business.
The second partner is Muang Thai Life Assurance Public Company Limited (Thailand) with 68 years of insurance business. This is one of the leading life insurers in the Thai market, ranked No. 1 in premium revenue through Bancassurance channel. The premium revenue through Bancassurance channel of Muang Thai Life accounts for over 50% of total bancassurance premium revenue in Thailand.
Ageas has appointed senior personnel to join the executive committee and work full-time at MB Ageas Life. In addition, Ageas and Muang Thai Life also have a team of support experts who come on a regular basis to directly work or provide regular support to MB Ageas Life in product development, operation of information technology and sales skills.
The partners not only provide us with their own technology, knowledge and experience, but also the experience in insurance business across the Asian market, where they had gained valuable experiences engaging in establishment of joint ventures.
- What is the business orientation of MB Ageas Life for the time to come?
- Our product development orientation is agility so as to focus on providing the most appropriate benefits to our customers. Customers can choose packaged solutions or customized plans according to their different needs.
We have launched products tailored to the needs of the majority of potential customers such as protection products and a combination of protection and savings. Endowment products includes Accumulation for life, Nurture talents etc. These solutions are combination of protection and savings, or bank loans-integrated products such as MRTA (MBAL An Cư), LTA (MBAL An Phát).
In addition, the line of complementary products is designed to maximize customers’ benefits such as critical illness insurance, accidental permanent disability insurance, and premium-waiver insurance. In the time to come, we will continue to launch products of protection combined with investment.
With respect to our network, we are developing simultaneously two (2) channels including Bancas channel with the foundation being the service network of MB and the traditional agency channel. Currently, the joint venture has implemented such channel at 12 branches in the system of MB with a satisfactory number of customers. By the end of May, all transaction offices under MB’s branches in Hanoi will be covered. By the end of August, we will have been present almost across Ho Chi Minh City and by the year end, we will basically finalize 102 online branches across the entire system of MB.
As an agile brand that values the customers’ experience, we will embrace digital technology trends towards streamlining all administrative procedures and shortening time for service delivery.
We are confident about our plan to penetrate the Vietnam’s life insurance market. This also helps MB to realize its goal of becoming a versatile financial group in the future.