Insurance: Tax Deductibility And Awareness Increase
Reported by Tu Tam
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| Philip hampden-Smith, executive vice pesident and general manager, southeast Asia Operations, Manulife Financial |
Upon his working trip to Manulife Vietnam to celebrate the 2009 agency award dinner and chart out the strategy for the next two years, Philip Hampden-Smith, executive vice president and general manager, Southeast Asia Operations, Manulife Financial, talks with the Weekly about Manulife’s plans and his opinions on developing the market
Q: How does Manulife look at Vietnam insurance market?
A: We have a large business in Indonesia with over 2 million customers. We started the business in 1985 and it took a number of years to achieve that scale. We see a similar potential in Vietnam. We have been here for over 10 years and the business has increased rapidly. Demographically, Vietnam has the same opportunity with a young population showing increasing needs for financial products. I would say that Vietnam business will be like Indonesia in a few years – very large business with millions of customers to become a significant part of our Asia platform.
We want to serve our clients in a number of different ways with all our products, both insurance and investment. In 5-10 years, we will be able to realize that goal.
What do you plan to grow your business in the ASEAN market in the years to come?
We have a balanced portfolio strategy in different countries with different stages of development; some are very mature markets, some growing slowly, and some advancing very rapidly. Vietnam is in the rapid growth category, and we have seen annual growth of 25-30%. We have devised significant plans for the Vietnamese market for the next four to five years based on developing the agency network force and other alternative distribution channels, such as bancassurance, call centers, general agency and telemarketing.
How do you see the industry in the next few years?
Vietnam has significant potential with a young population and increasing wealth and emerging people with interest in insurance and I’m sure we will see rapid growth in the market.
Insurance here is still underdeveloped that accounts for only 2% of GDP. In other markets, it is usually 14-15%. It is therefore in very early stages. Insurance here has not reached out to the broader population and we are working very hard on our products and services, such as the micro insurance we introduced last year for rural areas. We consider this as a way of reaching out to many first-time buyers who really need insurance. This program is the exact focus on customers’ needs. That is how we tailor products for market demand. We started it in the second half of last year. So far, we have been very successful. In the first three months of our program, we reached out to almost 20,000 new customers and our plan this year is to increase our rural clientele to 80,000-90,000. We see this as a social exercise at the moment, but we are confident that in the long-term it will be sustainable.
Can you reveal Manulife’s focus for 2010?
The real focus now is our customer services. We are recognized at 2009 Golden Dragon Awards as the company with the best insurance service in Vietnam. I think it is not as important about selling insurance as about after-services which is vital in any market. Obviously, we will continue to develop our products to meet customers’ pressing needs and improve our service quality. This is our focus for this year. We are profitable only when clients stay with us. So, it is crucial to provide good services, maintain long-term relationship and develop trust in customers.
How about financial investment?
As an insurance company, we have to invest our assets back to the liability. We have a significant global entity called MFC Global Investment Management which every year invests billions of dollars. This business is significant throughout Asia. We have an investment operation in Vietnam which is still in very early days. But we are here to show support to the Government and the development of the capital market on the equity and bond sides. This is our long-term plan.
What is your recommendation for the authorities for further development of the industry?
One of the good ways is to apply tax deductibility in insurance so that when you pay a premium you get a tax benefit. In other markets, governments support the financial-decision maker by allowing tax deductibility when they buy insurance policies. This is the most important stimulus for insurance and a strong message to consumers.
The Government can also help promote and educate about insurance. I think education is a good non-financial measure as well. One of the things we usually do is to organize road shows in universities that help young people understand insurance. It does not only offer a career but also increases their awareness. We have not done it directly here, but there are a lot of opportunities to work hand in hand with the Government to help the industry grow and help the people.