The Vietnam insurance market could reach VND46 trn (US$2.2bn) in premiums in 2012, according to AM Best.
The rating agency's Special Report on Vietnam said that the country's insurance market has experienced strong double-digit premium growth in recent years, and forecasts that its expansion will continue, despite the ongoing economic uncertainties around the globe.
The report found an emerging middle class and increased awareness of the benefits of insurance, and said that compulsory lines of business, including motor third-party liability cover, are contributing to a greater takeup of insurance.
Furthermore, the Vietnam economy is continuing to expand, enabling government spending on construction and infrastructure projects.
Inflation, currency depreciation and tight fiscal policy led to lower consumption and caused growth in gross domestic product to decelerate to an estimated 5.8% in 2011, but economic growth is expected to accelerate to 6.3% in 2012.
The insurance sector opened up after Vietnam joined the World Trade Organization in 2007 and has experienced a strong increase in direct premiums written, albeit from a low base.
The market is served by 29 non-life insurers and 14 life companies, which are regulated by the Ministry of Finance through its Insurance Supervisory Authority.
The Association of Vietnamese Insurers estimates that total insurance revenue reached 37.5 trillion Vietnam dong (U$1.78bn) in 2011, a 21.6% increase compared with 2010.
According to the trade body's statistics, non-life insurance revenues for 2011 were an estimated VND21.5trn, up 26% over the same period in 2010, while sales of life insurance reached an estimated VND16trn, a 16% increase over the same period in 2010.
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