HEALTH INSURANCE REPORT 2017
Content Abbreviation 3 2.4.2 Public Health Insurance 36 Summary 4 2.4.3 Private Health Insurance 45 1. Business Environment 7 Life Insurance 46 1.1 Macroeconomic situations 7 Non-life Insurance 48 1.2 Legal Framework 11 3. Private Health Insurance Investigation 50 1.3 Trade Agreements 17 3.1 Products 50 2. Overview of Health Insurance Market 20 3.2 Sales Channel 53 2.1 The History of Development 20 3.3 Premium Payment Methods 56 2.2 Industry Characteristics 22 3.4 Compensation Methods 58 2.3 Global Health Insurance Market 26 4. Opportunites and Threats 60 2.3.1 Public Health Insurance 27 4.1 Opportunities 60 2.3.2 Private Health Insurance 29 4.2 Threats 62 Life Insurance 29 5. Business Analysis 66 Non-life Insurance 31 5.1 Business Introduction 66 2.4 Vietnam s Health Insurance Market 33 5.2 Financial analysis 77 2.4.1 The Size of Industry 34 6. Appendix 82 2
Abbreviation FS Financial Statement IAV The Insurance Association of Vietnam ISA Department of Insurance Supervision Administration MoIT Ministry of Industry and Trade MoF Ministry of Finance MoH Ministry of Health VSS Vietnam Social Security VIRAC Vietnam Industry Research and Consultant Joint Stock Company 3
Summary Total market value of health insurance industry has grown rapidly over the years at a CAGR of 17.4% for the period 2010 2016e. health insurance has continued to increase over the years. Currently, most high-tech, high-cost services are being covered by health insurance, Public health insurance accounted for about 80% of the market value of health insurance, however, the distribution ratio was declining. Health insurance overspending has increased over the years, 4
Summary According to the Department of Insurance Supervision Administration (ISA), by the end of 2016, the whole market has a total of In fact, the percentage of people owning an insurance policy is still very low. Revenue from health insurance premium in Vietnam has continued to grow over the years at a CAGR (2010-2016) of Health Insurance is Life Insurance always accounts for more than The number of life insurance contracts in Vietnam has continued to grow over the years at a CAGR (2010 2016) of. Currently, Vietnamese people are tending to choose practical products, 5
Summary Currently, there are 5 main sales channels used by major health insurance companies, including: However, health insurance market still faces many challenges Cash and bank transfer are the most common This page is methods intentionally used by businesses to removed compensate for demo purpose In order to create favorable conditions for customers, insurance companies have developed many payment methods of insurance premium. 6
Content 1. Business Environment 1.1 Macroeconomic situations 1.2 Legal Framework 1.3 Trade Agreements 7
1. Business Environment 1.1 Macroeconomic situations The GDP growth rate in 2016 is estimated to increased by 6.21% compared to 2015. GDP growth, 2011 2016e Revenue from medicine and medical services has risen sharply in 2016. The reasons are Source: VIRAC, GSO USD GDP per capita, 2012-2016 GDP per capita has continued to increase over the years at a CAGR of Source: VIRAC, GSO 8
1. Business Environment 1.1 Macroeconomic situations Consumer price index of the whole country and the price index of Medicine and Health services in 2016 % VND/USD exchange rate, 2015-2016 Source: VIRAC, SBV Source: VIRAC, GSO The price index of Medicine and Health services has been kept stable and lower than or equal to the consumer price index of the whole country. VND/USD exchange rate tends to increase gradually by the end of 2016. 9
1. Business Environment 1.1 Macroeconomic situations Population Structure, 1999-2016 Trends in fertility and increasing life expectancy Source: VIRAC, GSO The population aging as well as the government efforts to expand access to health care for people make 10
Content 1. Business Environment 1.1 Macroeconomic situations 1.2 Legal Framework 1.3 Trade Agreements 11
1. Business Environment 1.2 Legal Framework Decision No. 36/2005 / QD-BYT dated October 31, 2005 Regarding the issuance of high-tech, high-tech services Service Detail Service Detail * For details of services refer to Decision No. 36/2005 / QD-BYT 12
1. Business Environment 1.2 Legal Framework The Law on Insurance amended and supplemented in 2014 has many changes compared to the Law on Health Insurance No.25/2008/2012 Expanding subjects participating in insurance: Social insurance is responsible for paying health insurance for people who is being on maternity leave. Regulation on issuing the health insurance card for children under 6 years old 13
1. Business Environment 1.2 Legal Framework The Health Insurance Law amended and supplemented in 2014 regulates the level of health insurance benefits in case of incorrect level. Health Insurance Law No 25/2008/QH12 Law No 46/2014/QH13 14
1. Business Environment 1.2 Legal Framework On 15th May 2017, the Ministry of Finance has issued Circular No. 50/2017/TT-BTC guiding the emplement of Decree No.73/2016/ND-CP. It has regulated the emplement of Law on Insurance Business and Law amending and supplementing a number articles of the Law on Insurance Business in detail. Some highlights amended and supplemented: 15
1. Business Environment 1.2 Legal Framework 16
Content 1. Business Environment 1.1 Macroeconomic situations 1.2 Legal Framework 1.3 Trade Agreements 17
1. Business Environment 1.3 Trade Agreements After participating in the TPP 18
1. Business Environment 1.3 Trade Agreements Although insurance industry is seemed to have many opportunities,, insurance businesses will be faced with many difficulties when Vietnam participates in the TPP. 19
Content 2. Overview of health insurance market 2.1 History of Development 2.2 Industry Characteristics 2.3 Global health insurance market 2.4 Vietnam s health insurance market 20
2. Overview of health insurance market 2.1 History of Development Until 1990 In 1992 1991-2000 In 1998 2001-2010 2011 now 21
Content 2. Overview of health insurance market 2.1 History of Development 2.2 Industry Characteristics 2.3 Global health insurance market 2.4 Vietnam s health insurance market 22
2. Overview of health insurance market 2.2 Industry Characteristics Public health insurance Model of health insurance management and operation (in public) Source: VIRAC 23
2. Overview of health insurance market 2.2 Industry Characteristics Public health insurance Unit Function, Obligation Source: VIRAC, Decree 01/2016 / ND-CP 24
2. Overview of health insurance market 2.2 Industry Characteristics Private health insurance Private health insurance Activities by insurance product groups in detail Group Product details Insurance business are divided into 5 groups Source: VIRAC 25
Content 2. Overview of health insurance market 2.1 History of Development 2.2 Industry Characteristics 2.3 Global health insurance market 2.4 Vietnam s health insurance market 26
2. Overview of health insurance market 2.3 Global health insurance market 2.3.1 Public health insurance The proportions of people participating in health insurance (public health insurance) in the developed countries are The proportions of people participating in health insurance (in public and private) in some of OECD countries in 2015 Source: VIRAC, OECD Statistic The ratio of payment outside of health insurance (in public) in some countries, 2016 The ratio of payment outside of health insurance indicates the coverage of health insurance benefits. Source: VIRAC, OECD Statistic 27
2. Overview of health insurance market 2.3 Global health insurance market 2.3.1 Public health insurance Medical expenditure in some big countries, 2016 Billion USD America is a country has medical expenditure China s medical expenditure is Source: VIRAC, The International Trade Administration State budget expenditure on health in some big countries, 2016 Billion USD Population and medical expenditure per capita in some big countries, 2016 Million people USD Source: VIRAC, The International Trade Administration Source: VIRAC, The International Trade Administration 28
2. Overview of health insurance market 2.3 Global health insurance market 2.3.2 Private health insurance market Life insurance Although the business context is unfavorable with stricter legal regulations and declining economic growth Global life insurance market, 2012-2018f Thanks to strong growth from emerging markets, especially in Asia Source: VIRAC, Swiss Re Life insurance in some developed countries, 2012-2018f Source: VIRAC, Swiss Re 29
2. Overview of health insurance market 2.3 Global health insurance market 2.3.2 Private health insurance market Life insurance In terms of product structure, in 2016, in the face of slow economic growth and latent risks Besides, in order to increase profitability, life insurance businesses are tending to move on An other trend is In 2016, the portfolio of life insurance businesses is still focused on 30
2. Overview of health insurance market 2.3 Global health insurance market 2.3.2 Private health insurance market Non-life insurance Global non-life insurance market, 2012-2018f In developed countries, the growth rate of insurance premium Source: VIRAC, Swiss Re The non-life insurance market in 2016 is seen a slight decline and reached The non-life insurance market in some developed coutries, 2012-2018f Source: VIRAC, Swiss Re 31
2. Overview of health insurance market 2.3 Global health insurance market 2.3.2 Private health insurance market Non-life insurance In the Asian market, Therefore, the growth rates in developed countries are expected to slow, while revenues of insurance premium in emerging markets are expected to 32
Content 2. Overview of health insurance market 2.1 History of Development 2.2 Industry Characteristics 2.3 Global health insurance market 2.4 Vietnam s health insurance market 33
2. Overview of health insurance market 2.4 Vietnam s health insurance market 2.4.1 The size of industry Billion dongs The market value of health insurance industry, 2010-2016e The total market value of health insurance industry is made up of two groups: Source: VIRAC, MoH, ISA 2010 2011 2012 2013 2014 2015e 2016e Public medical expenditure Revenue of health insurance - non-life insurance Revenue of life insurance Total market value The total market value of health insurance industry has increased rapidly over the years at a CAGR in the period 2010 2016e of 34
2. Overview of health insurance market 2.4 Vietnam s health insurance market 2.4.1 The size of industry Public health insurance account for Market structure by group, 2010-2016e However, the contribution ratio of public health insurance in health insurance market is because Source: VIRAC, MoH, ISA 35
2. Overview of health insurance market 2.4.2 Public health insurance The level of payment for medical examination and treatment not covered by health insurance contracts and medical examination abroad is stipulated in clauses 2 and 3, Article 9 of Joint Circular No. 09/2009 / TTLT- BYT-BTC is as follows: Medications, including western medicine and traditional medicine, are covered by the health insurance fund based on the list of drugs issued by the Ministry of Health that meet the treatment needs of health care facilities.. However, the implement of examnination and treatment is still faced with difficulties when 36
2. Overview of health insurance market 2.4.2 Public health insurance market Structure of the insurance budget, 2010 and 2012 Public health expenditure (from state budget, health insurance and aid) the contribution ratio in total health budget for 2010 2012. Source: VIRAC, MoH, ISA Allocation of health budgets by regions, 2014 The allocation and use of health insurance fund is regulated in Source: VIRAC, MoH, ISA 37
2. Overview of health insurance market 2.4.2 Public health insurance The proportion of people participating health insurance continues to increase over the years Thousand people People participating in health insurance, 2009-2016e 3 targets of the project The implement of route toward national health insurance for the period 2012 2015 and 2020 - Source: VIRAC, MoH, ISA With positive changes from the Law on Health Insurance amended in 2014 as: : 38
2. Overview of health insurance market 2.4.2 Public health insurance The Law amending and supplementing a number of articles of the Law on Health Insurance in 2008 stipulates that the subjects paritcipating in health insurance shall be as follows: Group Subjects and the contribution ratio The level of health insurance benefits Source: VIRAC, The amended Law on Insurance: Law No 46/2014/QH13 39
2. Overview of health insurance market 2.4.2 Public health insurance The proportion of participants by group, 2011 The structure of participants by group, 2010-2015 Source: VIRAC, VSS The proportion of people participating in insurance of group which is occupied by the social insurance agency accounts for Source: VIRAC, MoH 40
2. Overview of health insurance market 2.4.2 Public health insurance Health insurance overspending has increased over the years, the reasons are: Articles 23. (the Law on Health Insurance amended and supplemented in 2014): cases not covered by health insurance are: The Law on health insurance No. 25/2008/QH12, Article 21, Decision No. 1399/QD-BHXH, Article 8 and the Law on health insurance No.46/2014/QH13, Article 1 Clause 14 regulate that the cases covered by health insurance are: 41
2. Overview of health insurance market 2.4.2 Public health insurance Health Insurance will cover high-tech and high cost medical services which are not bigger than The level of health insurance benefit Group Currently, most high-tech and high-cost services are being covered by health insurance. Source: VIRAC, Decree No. 62/2009/ND-CP 42
2. Overview of health insurance market 2.4.2 Public health insurance According to Law No. 46/2014 / QH13 and Circular 40/2015 / TT-BYT, regulations on raising the central, provincial and district levels as: The level of payment for medical examination and treatment not covered by health insurance contracts and medical examination abroad is stipulated in clauses 2 and 3, Article 9 Circular No. 09/2009/TTLT-BYT-BTC as follows: However, the implement of examination and treatment is still faced with difficulties when But the payment of drugs under health insurance is still faced many problems 43
2. Overview of health insurance market 2.4.2 Public health insurance Businesses operating in the field of private insurance, 2016 ), by the end of 2016, in the whole market, there are 44
2. Overview of health insurance market 2.4.2 Private health insurance Revenue from health insurance premium in Vietnam continued to increase over the years at a CAGR (2010 2016) of Billion dongs Revenue from health insurance 2011-2016e Source: VIRAC, ISA Contribution structure in health insurance, 2010-2016e Source: VIRAC, ISA 45
2. Overview of health insurance market 2.4.3 Private health insurance Life insurance Billion dongs Revenue from life insurance premium, 2010-2016e The structrure of revenues from premium of typical businesses, 2016e Source: VIRAC, ISA Source: VIRAC, ISA Revenue from life insurance premium in Vietnam continues to increase over the years at a CAGR (2010 2016) of Most of life insurance businessess are 46
2. Overview of health insurance market 2.4.3 Private health insurance Life Insurance The number of life insurance contracts in Vietnam continues to increase over the years at a CAGR (2010 2016) of The number of life insurance contracts, 2010 2016e Billion dongs Currently, Vietnamese people still tend to choose practical products, Nguồn: VIRAC, ISA The structure of revenue from premium by products, 2016e Source: VIRAC, ISA 47
2. Overview of health insurance market 2.4.3 Private health insurance Non-life insurance Revenue from health insurance premium - non-life insurance in Vietnam continues to increase over the years at a CAGR (2010 2016) of Revenue from health insurance premium - non-life insurance, 2010-2016e Billion dongs Source: VIRAC, ISA The market share of revenue from original premium by businesses, 2016e Source VIRAC, ISA 48
2. Overview of health insurance market 2.4.3 Private health insurance Non-life Insurance Billion dongs The structure of revenue by products, 2010-2016e Amount of health insurance compensation non-life insurance, 2011-2015 Billion dongs Source: VIRAC, ISA Source: VIRAC, ISA Revenue from health insurance premium non-life insurance in Vietnam accounts for 49
Content 3. Private Health Insurance Investigation 3.1 Products 3.2 Sales Channel 3.3 Premium payment methods 3.4 Compensation methods 50
3. Private Health Insurance Investigation 3.1 Products The health insurance is the only competitive product between Inpatient Treatment Outpatient Treatment Surgery Permanent disability Accident Dead Fatal disease Maternity Dentistry Main product Additional Product Not provided Source: VIRAC 51
3. Private Health Insurance Investigation 3.1 Products Most of the health insurance products of the businesses are Age Contract Term (years) Request Time to browse Interest rate Source: VIRAC 52
Content 3. Private Health Insurance Investigation 3.1 Products 3.2 Sales Channel 3.3 Premium payment methods 3.4 Compensation methods 53
3. Private Health Insurance Investigation 3.2 Sales Channel Currently, there are 5 main sales channels used by major insurance companies, including: branches and trading offices, direct sales consultant, bancassurance, online channels and và other channels through other partners. Branches/ Offices Financial Consultant Bancasurance (cooperate with banks) Online Others Source: VIRAC 54
3. Private Health Insurance Investigation 3.2 Sales Channel The size of Vietnam s life insurance market is still very small, so it depends so much on the model of offices and financial consultants channel is about, The proportion of premium from Bancassurance Insurance products in Vietnam have not purchased so much through Other sales channels is a new direction 55
Content 3. Private Health Insurance Investigation 3.1 Products 3.2 Sales Channel 3.3 Premium Payment Methods 3.4 Compensation Methods 56
3. Private Health Insurance Investigation 3.3 Premium Payment Methods is the most common method offered by businesses to facilitate the payment of premiums of customers. Cash Bank Transfer Post Office Onl Others Provided Not provided Source: VIRAC 57
Content 3. Private Health Insurance Investigation 3.1 Products 3.2 Sales Channel 3.3 Premium Payment Methods 3.4 Compensation Methods 58
3. Private Health Insurance Investigation 3.4 Compensation Methods businesses are the common methods used by businesses to pay insurance compensation to customers. Besides, in some insurance Cash Bank Transfer Pay directly to the service provider Source: VIRAC 59
Content 4. Opportunities and Threats 4.1 Opportunities 4.2 Threats 60
4. Opportunities and Threats 4.1 Opportunities 61
Content 4. Opportunities and Threats 4.1 Opportunities 4.2 Threats 62
4. Opportunities and Threats 4.2 Threats In spite of high and stable growth, the health insurance market still has a small scale compared to its potential The unreasonale allocation of funds Vietam Social Security (VSS) is ineffective 63
4. Opportunities and Threats 4.2 Threats The payment outside the health insurance is a high level in the region. Pharmaceutical expenditures make up a large proportion of the state budget The payment outside the health insurance, 2006-2011 Source: VIRAC, World Bank 64
4. Opportunities 4.2 Threats More and more businesses are offering health insurance products so that it leads to fiercer competition. The resolvement of compensation is still faced with problems. 65
Content 5. Business Analysis 5.1 Business Introduction 5.2 Financial Analysis 66
5. Business Analysis 5.1 Business Introduction Bao Viet Group Bao Viet Insurance Net revenue from insurance business activities of Bao Viet Insurance, 2012-2020 Billion dongs Source: VIRAC, Bao Viet Group 67
5. Business Analysis 5.1 Business Introduction Prudential Vietnam Life Insurance Co, Ltd. Prudential Net revenue from insurance business activities Prudential, 2012-2016 Billion dongs Source: VIRAC, FS of Prudential 68
5. Business Analysis 5.1 Business Introduction PVI Insurance Corporation PVI Insurance Revenue from insurance,reinsurance and brokerage activities of PVI, 2012-2016e Billion dongs Source: VIRAC, IAV 69
5. Business Analysis 5.1 Business Introduction Manulife Company Limited (VietNam) Billion dongs Net revenue from insurance business activities of Manulife, 2012-2016 Source: VIRAC, FS of Manulife 70
5. Business Analysis 5.1 Business Introduction Dai-ichi Life Insurance of Vietnam Company, Limited Billion dongs Revenue from insurance business activites of Dai-ichi life, 2012-2016 Source: VIRAC, FS of Dai-ichi life 71
5. Business Analysis 5.1 Business Introduction AIA (Vietnam) Life Insurance Company Limited Billion dongs Net revenue from insurance business activities of AIA, 2012-2016 Source: VIRAC, FS of AIA 72
5. Business Analysis 5.1 Business Introduction PETROLIMEX INSURANCE CORPORATION (PJICO) PJOCO INSURANCE Billion dongs Net revenue from insurance business activities of PJCO, 2012-2016 Source: VIRAC, FS of PJICO 73
5. Business Analysis 5.1 Business Introduction Chubb Life Insurance Vietnam Company Limited Net revenue from insurance business activities of Chubb, 2012-2016 Billion dongs Source: VIRAC, FS of Chubb 74
5. Business Analysis 5.1 Business Introduction Hanwha Life Insurance Company Limited (VietNam) Billion dongs Revenue from insurance business activites of Hanwha, 2012-2016 Source: VIRAC, FS of Hanwha 75
5. Business Analysis 5.1 Business Introduction Prévoir 76
Content 5. Business Analysis 5.1 Business Introduction 5.2 Finacial Analysis 77
5. Business Analysis 5.2 Financial Analysis Billion dongs Profit after tax, 2015-2016 Source: VIRAC High profit is still concentrated in the long-term enterprises in the insurance market in Vietnam as: 78
5. Business Analysis 5.2 Financial Analysis Rate of return, 2015-2016 Source: VIRAC 79
5. Business Analysis 5.2 Financial Analysis Billion dongs Cost from insurance business activities, 2015-2016 Source: VIRAC 80
5. Business Analysis 5.2 Financial Analysis Billion dongs Total Assets, 2015-2016 The financial capacity of insurance businesses is increasing steadily Source: VIRAC Debt Structure, 2015-2016 81
Content 6. Appendix 82
6. Appendix Bao Viet Group BALANCE SHEET Million dongs 2015 2016 1 INCOME STATEMENT Million dongs 2015 2016 2 3 4 5 6 83
6. Appendix Prudential BALANCE SHEET Million dongs 2015 2016 INCOME STATEMENT Million dongs 2015 2016 84
6. Appendix PVI Insurance BALANCE SHEET Million dongs 2015 2016 BÁO CÁO KẾT QUẢ HOẠT ĐỘNG KINH DOANH Million dongs 2015 2016 85
6. Appendix Manulife BALANCE SHEET Million dongs 2015 2016 INCOME STATEMENT Million dongs 2015 2016 86
6. Appendix Dai-ichi life BALANCE SHEET Million dongs 2015 2016 INCOME STATEMENT Million dongs 2015 2016 87
6. Appendix AIA BALANCE SHEET Million dongs 2015 2016 INCOME STATEMENT Million dongs 2015 2016 88
6. Appendix PJICO BALANCE SHEET Million dongs 2015 2016 INCOME STATEMENT Million dongs 2015 2016 89
6. Appendix Chubb BALANCE SHEET Million dongs 2015 2016 INCOME STATEMENT Million dongs 2015 2016 90
6. Appendix Hanwha BALANCE SHEET Million dongs 2015 2016 INCOME STATEMENT Million dongs 2015 2016 91
6. Appendix Prévoir BALANCE SHEET Million dongs 2015 2016 INCOME STATEMENT Million dongs 2015 2016 92