With low premiums, simple and easy-to-understand products, limited coverage and a community-oriented approach, micro-insurance is particularly suited to low-income and vulnerable groups, which account for roughly one-quarter of Vietnam’s population.
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| Microinsurance is poised for wider adoption as market conditions evolve |
Dinh Nhu Tuynh, CEO of Military Insurance Corporation (MIC), told VIR that fewer than 3 per cent of Vietnam’s population currently hold insurance policies.
“With a population of more than 100 million, an estimated 20-25 million people fall into the low-income and vulnerable segments, including informal workers, industrial park employees, farmers and small household business owners. These groups are also among the most exposed to risks arising from natural disasters, illness and accidents.
However, a significant proportion of workers remain uninsured because insurance costs are still relatively high to their ability to pay, enrolment procedures and documentation requirements remain cumbersome, while insurance benefits are often difficult for consumers to understand and access,” he said.
In fact, insurance companies have targeted these groups for years as a potentially attractive customer base due to their strong demand for protection against risks and health-related contingencies.
According to the MIC, around 23 per cent of the population – equivalent to approximately 23 million people – incur medical treatment expenses each year, with average costs of about $140 per case.
Yet, the market remains notably short of genuinely mass-market insurance products offering broad coverage at affordable premiums.
In Vietnam, micro-insurance has been available for many years but has achieved only modest success. One reason is that a strong focus on profitability has reduced insurers’ willingness to develop this segment actively.
By contrast, in the Philippines – a country with a broadly similar economic structure and population size to Vietnam – micro-insurance has developed strongly, achieving one of the highest penetration rates in Asia.
One insurer in the country has reportedly provided micro-insurance coverage to 24 million customers, generating annual revenue of around $40 million.
A key obstacle to the development of micro-insurance in Vietnam is customer acquisition cost. Under traditional business models, micro-insurance revenue is often insufficient to offset these costs because premiums are low while claim ratios tend to be high.
However, this situation could change as digitalisation makes it easier and more cost-effective to distribute micro-insurance products.
Many insurers are seeking to expand sales through digital channels, with annual premiums of just over $4.
Some companies have redesigned existing products into more affordable offerings by reducing coverage amounts and corresponding premiums.
For example, MIC recently launched its MIC 360 product suite with an ultra-low premium of less than $5 per year, distributed through the insurer’s mobile application.
Talking to VIR, MIC executive said they expect the low-cost product range to reach 2.5 million workers, including around 100,000 customers in 2026 alone.
Notably, under the National Financial Inclusion Strategy for 2026-2030 approved by the government on May 25, insurance premium revenue is targeted to reach approximately 3.3-3.5 per cent of GDP by 2030.
The Ministry of Finance has been assigned to lead implementation, monitor progress and report on the achievement of this objective.
Regarding micro-insurancee, the MoF is also responsible for reviewing and proposing amendments to relevant mechanisms to establish a coherent legal framework and improve access for vulnerable groups, poor and near-poor households.
Once the new policy framework is completed and effectively implemented, the goal of providing micro-insurance coverage to 20-25 million low-income and vulnerable individuals by 2030 is expected to become achievable.
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Source:vir.com.vn
