Summary of PhD thesis in Finance - Banking: An analysis of the development of the non-life insurance market in Vietnam in the context of globalization

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1.4. Research overview CHAPTER 1 INTRODUCTION 1.4.1. Overview of foreign studies (CII, Institute Insurance According to Chartered

1.1. Rationale

The non-life insurance market in Vietnam is an emerging insurance market with a stable and high growth throughout the period (about 20% per year on average from 2000 to 2018) (Insurance Supervisory and Authority, 2019). Since officially joining WTO in 2007, Vietnam's non-life insurance market has grown in breadth and depth. From the economic perspective, globalization has had a great impact on the development of Vietnam's insurance market in general and the non-life insurance market in particular. With its position as an emerging market with a fast and strong growth rate in the context of globalization and integration, Vietnam's insurance market has the potential to continue to thrive in the future with many of its subsidiary segments. However, the market also faces a series of challenges such as weak financial ability; insufficient insurance ability related to weak risk assessment and management, and lack of experience as well the fierce competition in the domestic and foreign environment.

The selection of the topic named "An analysis of the development of the non-life insurance market in Vietnam in the context of globalization" allows the author to evaluate the process of development in general, clarify the development of market forces especially the enterprises in the context of globalization and propose suitable solutions in the future. 1.2. Research objectives

The study aims at analyzing the development of the non-life insurance market in Vietnam in general and forces in this market in particular in the context of globalization, proposing solutions to ensure the healthy and sustainable development of Vietnam's non-life insurance market. 1.3. Research subject and scope of research

The research subject is the development of the non-life insurance market and the study focuses on the changes and development of the non-life insurance market in general and forces in the market in particular in the context of globalization in the period from 2008 to 2018. 2012), internationalization and globalization are becoming increasingly important in the insurance business environment as they affect the organization, control and management in a company's strategies. Many aspects, which are mentioned and emphasized, are related to the emergence of capital sources in the form of investments by foreign companies, multinationals provided for domestic markets and the issue of market expansion or fee revenue growth. More specifically, when referring to the risk management of insurance companies in the context of increasingly globalization, Butterworth & Brocklehurst (2015) from CII offered guidelines which emphasized the market's resilience in the correlation between the capital and the domestic market's macro factors such as industry revenue, macro indicators including growth rate, inflation. Baur, Birkmaier, Rüstmann (2001) of Swiss Re's studied the role of insurance and the impacts of globalization and e-commerce in Eastern European countries. They concentrated on the role of foreign insurers in these markets and the role of market liberalization as an opportunity to promote market development. The author of this research paper also used the impact model originated by Swiss Re to evaluate the influence of market liberalization on the penetration of foreign insurers into the domestic insurance market. Similarly, Anđelić et al. (2010) examined the impacts of globalization on the insurance and reinsurance market in Eastern Europe. Their study addressed the issue of market restructuring, changes in capital size, structure and the scale of by- product premium revenue combined with insurance risk factors. Njegomir and Stojic (2012) studied each correlation between insurance demand and GDP, market entry barriers, return on investment, human resources, and profitability and foreign direct investment. They discovered that factors related to the exploitation of profitability, foreign direct investment and human resources are valuable factors in attracting foreign insurers and boosting the market. Research by OECD (2011) or McKinsey & Company (2014), Earn & Young (2015), Atul and Eugene (2006) all emphasized the penetration of foreign

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insurers into the domestic market. These studies found that the insurance market in general and the non-life insurance market in particular, especially in emerging countries, have strong growth in revenue in the context of globalization as domestic insurance companies have more opportunities to expand their market, import and upgrade technologies, improve capital ability , and improve the exploitation. Studies in China (Claudio, 2013), in India (Trefis Team, 2015) showed that the presence of financial corporations and foreign insurers is one of the factors influencing the development of insurance in these countries.

1.4.2. Overview of domestic studies

conflicts in distribution channels, however the author only analyzed the relationship between capital structure, service quality with the development of the market, and the correlation related to the increase in external capital and factors emerging from globalization and integration was not taken into consideration. Nguyen Thanh Nga (2015) focused on the supervision of the non-life insurance market. Some economists and scientists also analyzed opportunities and challenges for the development of Vietnam's insurance market in general and the non-life insurance market in particular in the context of globalization and integration, especially when Vietnam's commitments to the WTO have been and are being implemented, and the new FTAs are gradually being carried out in the future (Nguyen Thi Hai Duong, 2016; Nguyen Thi Hai Duong et al., 2016).

It can be seen that studies in Vietnam often carry out research into specific issues of the market such as state management related to market management and supervision (Nguyen Thanh Nga, 2015), or enterprises' investment (Trinh Chi Mai, 2012; Ho Cong Trung, 2015), or the development of the market via the aspect of business performance and efficiency (Trinh Xuan Dung, 2012). Changes in the forces of the non-life insurance market in Vietnam such as human resources, technology, risk management, products and distribution, customers under the impacts of integration have yet to be studied thoroughly in previous researches.

1.5. Research process

1.6. Research model and methodology

- Research model

The thesis applied the Porter's Five Forces Framework in the typical context of the insurance industry in general and the Vietnam's non-life insurance market in particular. Based on experts' opinions (Appendix 1) and the author's own experience, the study would focus on analyzing the three forces according to the five-force model in the context of the development of insurance the non-life in Vietnam which insurance market includes Tran Tho Dat and To Trung Thanh (2016) in "Vietnam's financial and monetary security in the new context", specifically in the section of insurance sector, mentioned that the integration positively impacted the development of Vietnam's insurance market in terms of size and quality. On the other hand, Pham Thi Dinh (2004) concentrated on investment activities of state non-life insurance companies. However, her study only had temporal statistical analysis related to the domestic capital size of a few enterprises. Globalization and its effects on the development of Vietnam's non-life insurance market were hardly mentioned. Trinh Chi Mai (2013) also focused on investment efficiency of non- life insurance enterprises in Vietnam with a time series that lasted up to 2011. This research did mention the integration, the participation of foreign enterprises and multinational corporations as objective factors affecting investment results and efficiency. Doan Minh Phung (2007) used research data dated back to 2006 including secondary data and conducted the statistical analysis to study the business performance of state-owned non-life insurance companies. Therefore, it did not fully reflect the specific influence of globalization on Vietnam's non-life insurance market. Ho Cong Trung (2015) studied firms' internal factors affecting the development of the non-life insurance market including service quality, capital structure and the analysis was carried out quantitatively based on primary and secondary data. Results mentioned inappropriate product structure, unreasonable capital structure and

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CHAPTER 2 companies (insurers), customers and organizations providing insurance legal consulting services. THEORIES OF NON-LIFE INSURANCE AND THE NON-LIFE INSURANCE MARKET IN THE CONTEXT OF GLOBALIZATION

Insurance companies 2.1. Theories of non-life insurance and the non-life insurance market 2.1.1. Non-life insurance 2.1.1.1. Definition Globalization Customers Market development

Suppliers

Figure 2.2. Proposed research model

- Research methods The author used qualitative research, quantitative research, group discussion, surveys, and descriptive statistics. Chartered Insurance Institute (CII, 2012) defined “Insurance is an activity through which an individual or an organization is entitled to indemnity or payment if any risk occurs due to the financial contributions for oneself or others. This compensation or payment is paid by an organization. That organization is responsible for the risks and compensates them properly according to the statistical law”. From the perspective of risk management, insurance is understood as a set of incidental losses through a method of transferring risks to the insurer, who agrees to indemnify for these losses, to provide compensation/payment when a loss occurs, or provision of services related to risks (Rejda & McNamara, 2017). 1.7. Structure of the thesis insurance has Regardless of any perspectives, the

following characteristics: Insurance is the activity of transferring risks and distributing losses on the basis of the law of large numbers; the formation of funds originating from people being exposed to risks; Risks must be homogeneous; Commitments between two parties including the risk bearer and the risk recipient; Financial protection of the loss caused by the risks; 2.1.1.2. Characteristics of non-life insurance

The characteristics of non-life insurance were described in detail in related studies by various authors and institutions across the world (Baranoff, 2004; Rejda & McNamara, 2017 ; Bland, 2000; Nguyen Van Dinh, 2008). Principally, they stated that insurance consists of four primary characteristics including risk concentration, payment/loss compensation, risk transferring and indemnity. 2.1.1.3. Types of non-life insurance

Non-life insurance is one of three types of insurance characterized by its protective feature, with the insured subjects being legal assets and liability. There are different criteria used to classify non-life insurance such as classification by subjects, classification by profession, classification by

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2.1.2.4. Entities participating in the non-life insurance market

insurance methods, classification by types of contracts, classification by clients (Baranoff, 2004, Rejda & McNamara, 2017; Bland, 2000; Nguyen Van Dinh, 2008; The Institute of Chartered Accountants of India, 2008). 2.1.2. Theories of non-life insurance market 2.1.2.1. Definition

Entities in the insurance market consist of three main groups: insurance companies, reinsurance companies and insurance intermediaries. In addition, participants in the market also include state regulators who supervise and regulate the market, customers participating in insurance, and related service providers such as surveillance companies, valuation organizations, industry associations, training organizations (Nguyen Van Dinh, 2008; Baranoff, 2004; Rejda & McNamara, 2017; Bland, 2000; The Institute of Chartered Accountants of India, 2008). 2.2. Development of the insurance market in the context of globalization 2.2.1. Definition of the development of insurance market in the context of globalization

Textbook of Insurance Administration (2010) defined the insurance market as a special service market, in particular the insurance market is the place where the act of buying and selling insurance products takes place, and it has sellers and buyers directly participating in the transaction. Buyers are individuals or organizations that have assets, civil liability before the law, have their life or body being exposed to various risks, and they have insurance demands, can purchase insurance services (products) directly or through intermediaries. Sellers are insurance companies that are licensed to provide insurance products on the market. 2.1.2.2. Characteristics of the insurance market

In a more simple definition, business development of an industry or an organization is a set of tasks and processes to actualize the growth opportunities and create values in the long term (Wikipedia, 2021). What is the development of the non-life insurance market in the context of globalization? Essentially, it still consists of a set of tasks and processes carried out to maximally take advantage of development opportunities and create values for the non-life insurance market in each country but in the context of globalization. 2.2.2. Globalization and the nature of globalization

According to WikiPedia, globalization is a process of interaction and integration between people, companies and governments around the world. Economically, globalization involves goods, services, data, technology, and economic capital resources. The expansion of the global market frees the economic activities of exchanging goods and funds. The removal of cross-border trade barriers has made the formation of global markets more feasible (Albrow et al., 1990). Globalization

Based on the characteristics of insurance products and related services, (Insurance Business the insurance market has distinct characteristics Administration Curriculum, 2010). Specifically, it is a market of financial services, which subjects to the State's strict supervision, a market provides products related to risks and uncertainty; operates according to the law of large numbers; has insurance activities with reversed business cycle, predetermined prices are determined in advance, costs incur later; insurance activities have the interconnection between markets; transactions between insurance buyers and sellers may be directly or through insurance intermediaries; the trend of globalization towards emerging markets is increasingly popular; Unlike other good-and service markets, in the insurance market, people can buy insurance products only when they don't need them, and use when they cannot afford them; the competition and association always exist parallelly in the insurance market. 2.1.2.3. Classification of the non-life insurance market

- Classification of the non-life insurance market according to the insurance subject - Classification of to customers insurance market according the participating in insurance

involves bilateral and multilateral agreements between organizations and countries or between countries and countries which revolves around the reduction or removal of barriers related to trade, culture, politics, and institutions. There are at least five aspects of market globalization. Firstly, the fluidity of manufacturing and sourcing; Secondly, globalization's creation of competition and diversification for suppliers; thirdly, increasingly diversified types of international business transactions; fourthly, technology spreads freely and rapidly between markets and players; fifthly, capital borrowing has also become popular all over the world. - Classification of the non-life insurance market according to the transaction nature - Other types of classification

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2.2.3. Changes and the development of the non-life insurance market in the context of globalization CHAPTER 3 ANALYSIS OF THE CONTEXT AND THE CURRENT SITUATION OF VIETNAM'S NON-LIFE INSURANCE MARKET

3.1. History of the development of Vietnam's non-life insurance market and international commitments in the insurance industry

Firstly, globalization increases the competition in various markets. Secondly, globalization increases the number of opportunities for emerging insurance markets in general and insurance firms in particular. Thirdly, new trends are able to enter the insurance industry in emerging markets. Fourthly, the demand for insurance is constantly increasing and diversifying. Fifthly, globalization is the factor that motivates insurance companies to improve service quality and increase customers' satisfaction who buy insurance products and services. 2.3. Indicators and criteria to evaluate the development of the non- 3.1.1. History of the development of Vietnam's non-life insurance market - From 1964 to 1993 This was the early stage of the non-life insurance market in Vietnam. The insurance market in this period was monopolistic , there was only one insurance company, Vietnam Insurance Company with the transaction name being Bao Viet. life insurance market 2.3.1. Criteria to evaluate the development of the non-life insurance market

Insurance ability, supply network, product diversity, market size, service quality. 2.3.2. Indicators to evaluate the development of the non-life insurance market 2.3.2.1. Insurance ability

- From 1994 to 2000 Decree 100/ND-CP issued on December 18, 1993 proposed regulations on types of enterprises, licensing, insurance business management, inspection and supervision... The market was opened and monopoly was eliminated. A series of insurance companies such as Bao Minh, PJICO, and Bao Long were established. Also during this period, the State granted the license of the joint venture between Vietnam International Assurance Company (VIA) and United Insurance Company of Vietnam (UIC).

Financial ability: chartered capital and equity, professional reserves. Indicators to evaluate the ability and manage insurance risks: Total amount of indemnity for original insurance, total amount of actual indemnity, rate of indemnity, rate of actual indemnity of original insurance, number of enterprises - suppliers. 2.3.2.2. Evaluation of product diversity: Quantity of products & number of new products. 2.3.2.3Evaluation of market size: Total amount of insurance premium revenue, actual retained amount of premium revenue, growth in insurance premium revenue. 2.4. Conditions promoting the development of the non-life insurance market in the context of globalization

- From 2000 to 2010 Law on Insurance was passed by the National Assembly of the Socialist Republic of Vietnam on December 9, 2000. In 2007, Vietnam officially joined the World Trade Organization (WTO), and commitments to open the market, especially the financial sector had promoted the integration of Vietnam's insurance market. A series of foreign insurance companies and financial groups entered the domestic market in the form of 100%-foreign- invested insurance companies or insurance joint ventures in Vietnam. Some new trends quickly penetrated the market such as the trend of linking insurance banks, internet advertising... 2.4.1. Objective conditions They are international commitments; socio-political economic conditions; Regulatory environment; Culture; Competition.

2.4.2. Subjective conditions Subjective conditions originate from the forces in the non-life insurance market themselves. These conditions focus on the issues of insurance companies, their customers, and the intermediaries. - From 2011 until now From 2011 until now, the number of enterprises has not experienced any drastical changes, but there are many modifications in the insurance business. In addition to the adjustment due to the "hot" growth during the period before 2010, the market is also affected by the financial crisis in the region and the

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world. The growth of insurance premium revenue of the whole market in this period tended to decrease, unfair competition increased, and insurance fraud were becoming more sophisticated and difficult to be detected, and the whole circumstance of human resources was messy. There are some enterprises being at risk of insolvency due to improper investment in accordance with law. It can be said that until now, Vietnam's non-life insurance market has remarkably developed towards the trend of international and market integration. 3.1.2. International commitments in the insurance industry of Vietnam

Commitment No. 318/WTO/CK (WTO, 2007) of Vietnam and WTO mentioned insurance in these following aspects. Firstly, it is the issue of cross- border service provision. Secondly, Vietnam commits to not restricting the establishment of a legal entity of a foreign insurance company, except that the market of compulsory insurance will only open to 100% foreign owned companies in early 2008. Thirdly, Vietnam eliminates the rate of compulsory reinsurance after one year of joining WTO. Fundamentally, services in the insurance sector do not have limited market access or national treatment.

3.2.1.2. Insurance competence - Financial ability It can be seen from Table 3.8 that by 2018, most of the insurance companies had the amount of charter capital being two times or higher than the minimum required amount stated by the Law. A few enterprises such as Liberty, AIG, AAA, BIC had the amount of chartered capital being over 1,000 billion VND; Bao Viet and PVI had the amount of chartered capital being over 2 trillion. This demonstrates that businesses had made certain efforts to increase their charter capital in the period of 2008-2018, but their level of commitment was still very limited compared to the size development of the non-insurance market in Vietnam. Regarding the equity of non-life insurance companies, according to data by Insurance Supervisory and Authority, most firms had the amount of equity being higher their charter capital, especially large state- invested businesses such as Bao Viet, PVI, BIC, ABIC, VBI, PJICO, and Bao Minh. There was a third of current non-life insurance companies with equity being smaller than their charter capital and they mostly were foreign-invested enterprises and private equity insurance companies including Phu Hung, Cathay, Fubon, Liberty, Groupama, AIG, ACE (Chubb), Vien Dong, AAA, GIC. The remaining companies had the amount of equity being 10% higher than registered charter capital. Equity decreased in many businesses as insurance companies operating as joint stock companies face many difficulties in raising capital and this was related to the sharp decline in the stock market in recent years. - Professional reserves The

In addition to Commitment No. 318/WTO/CK (WTO, 2007), Vietnam also negotiated a series of agreements with commitments to open the insurance market including: Vietnam-South Korea Free Trade Agreement on May 5, 2015, Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on March 7, 2018. These are important commitments that clearly demonstrate Vietnam's commitments. In order to open the insurance market in general, create favorable conditions for insurers and foreign investors to participate in the domestic market as well as make efforts to standardize insurance industry standards in order for the most effect integration into the international insurance market. 3.2. The development of the non-life insurance market in Vietnam (2008 - 2018) 3.2.1. Competence of the non-life insurance market in Vietnam (2008 - 2018) 3.2.1.1. Number of suppliers

As of December 31, 2018, the market had a total of 30 non-life insurance enterprises. In addition, there was also the presence of two reinsurance companies and 12 insurance brokers. total amount of professional reserves of non-life insurance enterprises grew strongly in the period of 2008-2018 with a fourfold increase and all met the requirements of state management agencies. - Ability of risk evaluation and management The indemnity ratio is one of the criteria used to evaluate the ability of risk assessment and management of each non-life insurance enterprise in particular and the non-life insurance market in general. The average rate of compensation for the whole market essentially remained at around 40% in the period of 2008- 2018. Some foreign-invested enterprises such as MSIG, Phu Hung had high compensation rates being above 70%, while insurance companies such as Fubon, Cathay, Phu Hung suffered heavy losses in 2014-2015 due to the sabotage in

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3.2.3. Investment in insurance

Binh Duong as mentioned above. The group of enterprises with state-invested capital maintained an average rate of over 40%, nearly 50% in the whole period 2008-2018. Nearly 2/3 of businesses had the compensation rate being maintained at around 30%. Some insurance companies with foreign-invested capital had high indemnity ratio due to the risk accumulation as there was only a small number of customers and insurers mainly concentrated on corporate customers. 3.2.2. Insurance business activities 3.2.2.1. Revenue The total amount of capital invested in non-life insurance enterprises in Vietnam increased steadily in the period and it was a three-time increase from 2008 to 2018. It can be seen from Table 3.6 that the market's portfolio was practically safe. The amount of capital invested in risk categories such as real estate, loans, capital contribution, and trust investment accounted for less than 20% of the total investment capital of the whole non-life insurance market. Therefore, Vietnam's non-life insurance market was considered to be financially healthy. 3.3. Evaluation of the current development situation of Vietnam's non-life insurance market (2008 - 2018) 3.3.1. Achievements

In recent years, an increase in the number of non-life insurers has created a vibrant market with increasingly diversified activities. From 2008 to 2018, the non-life insurance market in Vietnam had a 4.5 times increase in the total revenue, from 10,732 billion VND to 45,920 billion VND, the average growth rate maintained at 20%/year. Most of the revenue originated from two retail product groups with the insurance premium making up a large proportion of the total original premium, roughly 20% of the total market premium revenue came from the motor vehicle insurance and health insurance. Compared with the average growth of other emerging insurance markets, Vietnam's insurance market had a growth rate being 1.5 times higher than other emerging markets. 3.2.2.2. Indemnity

After nearly 20 years of opening, Vietnam's non-life insurance market has achieved a rapid growth and development, and significantly contributed to reducing risks in production, business and social life, improve the investment environment as well as positively affect the socio-economic growth. Premium revenue growth was high compared to GDP growth. The total amount of insurance premium revenue of the whole market from 2008 to 2018 increased with an average of 18% per year. The proportion of non-life insurance premium contributing to GDP was stable and remained around 0.8% per year. In terms of market structure, factors forming the insurance market were increasingly completed throughout the period. Types of organizations and enterprises operating in the insurance market were more diversified, and businesses' contents and fields of operation were expanded.

Table 3.3 illustrated that the highest amount of indemnity for original insurance in the period of 2008-2018 originated from personal insurance including motor vehicle insurance, health insurance. It was followed by corporate insurance which consisted of property damage insurance, fire insurance, and ship insurance. In the original compensation rate of the whole non-life insurance market from 2008 to 2018, the average open compensation rate was roughly 40%, which was not a high rate. This partly demonstrates the good quality of exploitation in Vietnam's non-life insurance market. 3.2.2.3. Reinsurance

The retention rate demonstrated that the competence of the non-life insurance market in Vietnam was relatively low, however when considering the data of actual indemnity in the period, it is clear that reinsurance had obtained some certain achievements as it helped non-life insurance companies in Vietnam significantly control the actual amount of compensation. Vietnam's non-life insurance market is broadly and deeply integrated into the regional and international insurance markets. Both management agencies and non-life insurance companies strictly follow the roadmap commitments for the insurance sector proposed by EU-Vietnam trade negotiations, Vietnam - US Trade Agreement, and WTO. These are integration commitments on trade liberalization and financial services. The market has had positive changes due to the impacts of foreign invested insurance enterprises. The management and supervision of the insurance business has been gradually improved to meet the requirements of market development. The legal system has been gradually improved.

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3.3.2. Shortcomings and causes - The size and role of the insurance market in socio-economic stability CHAPTER 4 EVALUATION OF THE IMPACTS OF GLOBALIZATION ON THE DEVELOPMENT OF VIETNAM'S NON-LIFE INSURANCE MARKET and development are limited.

4.1. Analysis of the research sample

+ Small market size: the size of Vietnam's non-life insurance market is still small. The contribution of the insurance industry to GDP (represented by the ratio of premium revenue/GDP) in 2012 was only about 1.5%, which was very low, lower than that of most neighboring countries and countries in the region such as Thailand (2.6%), Malaysia (3.4%), Singapore (6.6%), and the average ration of the world was 7.8%. The average premium per capita was only about 20 USD/year, which was also remarkably low compared to other developed countries in the region. + The insurance market's potential has yet to be fully exploited

+The insurance market's competence was still low as insurance companies are limited in terms of capital. Also the retention rate was low while the ceding rate was high. + Many limitations in investment

- The development of market was not balanced and synchronous: Transactions were still mainly concentrated in cities and urban areas. Although there were many insurance products, there was still a lack of products for some specific fields. The author conducted an online survey with the participation of 156 people working in the industry. After checking all the answers, the total number of valid responses was 150. Corporation-level leaders accounted for 22%, teachers and lectures in research institutes of insurance occupied 20.7%, and employees under insurance-related state management agencies took up 20%. In addition, there were officials with different positions in insurance companies, in which 15.3% were middle managers, 12% were experts with 10 years of experience, 10% were subsidiary-level leaders. Most of surveyed individuals aged from 36 to 50 with 71 people (47.3%). The remaining was 33 people aged from 50 to 60 (22%), 30 people aged from 23 to 35 (20%) and only a few of participants was above 60. The gender proportion in the survey was quite even, 78 of them were males (52%) and 72 of them were females (48%). Most of respondents had 10-20 years of working experience in the insurance industry with 115 people (73.7%). Those with more than 20 years of working experience were 21 people and less than 10 years of experience were 20 people. 4.2. Analysis of globalization's impacts on forces in the non-life insurance market in Vietnam

4.2.1. The impacts of globalization on non-life insurance companies - On insurance competence - Unfair competition and insurance fraud were likely to increase - The profitability rate of Vietnam's non-life insurance market was still low. The indemnity rate and the rate of actual retained compensation by most of professional groups were considerably low (mostly 50% or less), but the profitability rate in the whole research period was only roughly 6%/year.

As identified in the group discussion among experts (Appendix 1) and on the basis of the research overview, globalization firstly affected the insurance competence of insurers in the non-life insurance market in Vietnam. NLBH5 (Flexible governance with context/environment) had the lowest mean being 3.853 <4. Employees' assessment of NLBH1 (Corporate strategy is increasingly flexible with the context) had the highest mean being 4.167, followed by NLBH4 (Improved ability of risk assessment) with the mean being 4.100. - On human resources of non-life insurance

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observed variable CN1 had the negative correlation with variable CN2 and CN3, so this result demonstrated that the differences e in technology application between enterprises and between different professions. 4.2.2. The impacts of globalization on the customer factor in Vietnam's non-life insurance market

Results in Table 4.6 showed that the mean of control variables in the factor named Human resources was quite dispersed and it ranged from 3.6 to 3.8. In which, the variable NL1 (Improved quality of human resources) - the general evaluation and NL4 (Improved quality of human resources in the appraisal department) had the highest mean of 3.873, followed by the variable NL5 (The quality of human resources in the appraisal department did not meet the job requirements) had an mean of 3.867, the variable NL3 (the quality of human resources management did not meet the actual requirements) had the lowest mean being 3.680. - On products of insurance companies

Table 4.12 illustratred that the mean of of control variables of the Customer factor were relatively high. In which, variable KH1 had a mean of 3.980, and variable KH2 had a mean of 4.060. This also reflects the reality of the non-life insurance market in Vietnam: when the economy develops, the production is improved, and it is inevitable that the demand for insurance will increase. 4.2.3. The impacts of globalization on the Suppliers/Consultants in the non-life insurance market in Vietnam

Regarding the product factor, the mean of all three control variables were evenly above level 4, of which the variable SP3 (Insurers' products are increasingly diversified) had the highest mean being 4.180, variable SP1 ( Standardization of risk management) had the lowest mean among the three variables being 4.080, which was also considered a weakness in insurance exploitation in insurance companies.

- On insurance companies’ distribution

Regarding the distribution channel, the mean of the variables in the distribution factor were above 4.0, which showed that the influence degree of this factor ranged from relative to remarkable. Factor CƯ4 (Legal consulting/support organizations increasingly improve to meet the market's requirements) was highly appreciated with a mean of 4.093. Factor CƯ2 (Survelliance firms increase service and quality of service to meet the market's requirement) was poorly received with a mean being 3.960. This is also one of the areas lacking expertise and quantity as the market grows too fasst and the service have not been able to keep up with the growth and expansion of the market. - On service quality of insurance companies 4.2.4. Overall evaluation of globalization's impacts on the forces and development of Vietnam's non-life insurance market

Overall, the variables in this factor were evaluated as quite evenly and their mean all ranged from 4.0 and above. Factor CLDV3 (Improved consulting service quality) was assessed as the highest with a mean of 4.200, the factor CLDV2 (Improved customer service) was rated the lowest with a mean being 4.160. - On technology of insurance companies

The variable CN1 (Technology is increasingly being applied more deeply in both business processes and profession management) was highly appreciated by customers with a mean of 4.087, CN2 (Outdated technology in insurance) was poorly received by customers with the mean being 4.047. Actually, the When assessing the influence of globalization on the forces/factors of Vietnam's non-life insurance market, outcomes in Table 4.14 showed that differences was not founded between the survey results according to detailed observed variables in sections 4.1.2, 4.1.3 and 4.1.4 with the results presented in the table. The value of globalization's impacts on the forces of Vietnam's non-life insurance market was quite dispersed and ranged from 3.787 to 3.993. Specifically, variables AH1 (Positive effects on the development of non-life insurance companies) and AH3 (Positive effects on the suppliers/consultants of non-life insurance market) hadthe highest mean

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of 3.993, variable AH2 (Positive effects on customers of non-life insurance) had the lowest mean being 3.787.

The influence degree of changes in market forces' on the development of Vietnam's non-life insurance market: Evaluation of surveyed officials towards TCH1 (Modifications of non-life insurance companies) had the greatest influence on the development of the non-life insurance market in Vietnam with a mean of 4.140, Factor TCH3 (suppliers/consultants of the non-life insurance market). PNT) affected at a mean of 3.947. TCH2 (Changes of customers) had the lowest mean being 3.887.

The impact degree of globalization and integration on the development of Vietnam's non-life insurance market: The final testing was conducted to evaluate the influence of globalization on the development of Vietnam's non- life insurance market. The impact was deemed high as the mean was 4.308. This showed that managers and experts with experience were well aware of the market's context and operation. Knowledge of market operation is inseparable from international market and integration.

4.3. Analysis of each relationship between financial ability and the development of Vietnam's non-life insurance market

4.3.1. Financial ability and foreign investment 4.3.2. Testing results

To analyze the factors affecting the development of market size through revenue related to the cash flow from domestic and foreign-invested enterprises, the author used the quantitative model:

DT(cid:3) = α + β(cid:8) ∗ VSCH(cid:3) + β(cid:14) ∗ TS(cid:3) + β(cid:15) ∗ DP(cid:3) + ε(cid:3) Least Squares (OLS). The results showed that the impacts of factors on business performance were different between domestic insurers and foreign- invested insurance companies. Equity variable did not have influence on the business performance of the insurers in all three sets of data. At the statistical significance of 10%, total assets have a positive impact on the business performance of all insurers. However, with foreign insurers, the influence of total assets on original insurance premium revenue was higher. Estimated coefficient β ̂_2 = 0.37 indicated that, on average, when the total assets of foreign insurers increases by 1 dong, the original premium revenue increases by 0.37 dong. For domestic insurers, the estimated coefficient β ̂_2 = 0.297 indicated that, on average, when the total assets of domestic insurers increases by 1 dong, the original insurance premium revenue increases only about 0.3 dong. Therefore, foreign insurers had better ability to manage and use assets than domestic insurers. The regression model results also showed that the professional reserves did not have an impact on the original insurance premium revenue of domestic insurers. The estimated coefficient β ̂_3 = -0,344 had t-statistic value being only -1.02, so the variable DP is not statistically significant at all three significance levels of 1%, 5% and 10% respectively. In contrast, regarding foreign insurers, the professional reserves variable had the biggest influence on the original insurance premium revenue. The estimated coefficient β ̂_3 = 0.784 had a very high t-statistic value reaching 2,987. On average, when the professional reserves of foreign insurers increases by 1 dong, the original insurance premium revenue also increases by 0.784 dong. This shows that foreign insurers have stricter and more effective risk management and control than domestic insurers. 4.4. General evaluation

In which: DTt is the total revenue of original insurance premium in year t; VCSHt is total equity in year t; TSt is total assets of year t; DPt is professional reserves of year t.

The author conducted a detailed assessment of the impacts of globalization on the development of the insurance market through each factor related to the supply of the market. Firstly, insurance companies' improved insurance competence was remarkably improved as most factors in this aspect were 4 out of 5; only governance was rated 3 out of 5. This is the The author in turn run the above model with three different sets of data including the entire market, domestic and foreign insurers to analyze the different impacts of factors on business performance of domestic and foreign insurance companies. Regression models were run by the method of Ordinary

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CHAPTER 5 SOLUTIONS TO DEVELOP VIETNAM'S NON-LIFE INSURANCE MARKET IN THE CONTEXT OF GLOBALIZATION (2020 - 2030)

5.1. Requirements of globalization for the development of Vietnam's non-life insurance market 5.1.1. Opportunities - The Government's strategies for international integration and vision until 2030

- The potential of the non-life insurance market in Vietnam - The great maintenance of non-life insurance companies with their finances - Young population structure and low amount of insurance spending 5.1.2. Challenges

- Increasingly fierce competition - Vietnam's economy and the world's economy are negatively affected due to the Covid 19 pandemic factor that the non-life insurance firms in Vietnam are required to improve in the future. Secondly, the human resources of various posts in non-life insurance enterprises were assessed to have improved, although to a certain extent, they still have met the requirements of the market's development in the global context. Human resources for appraisal and reinsurance were evaluated to not meet the market's demands and this partly explains the low market efficiency while the compensation rate was low. Thirdly, product development had good modifications and there was a rapid integration of domestic insurance firms into product trends and market demands. Fourthly, the distribution channel was highly appreciated in terms of the openness as well as the quality. However, it was the factor with slowest growth among the three observed variables. Fifthly, service quality was highly appreciated due to the improvement as well as standardization in the consulting process. Sixthly, the technology was rated 4 out of 5 in terms of the deep application of technology in business, nevertheless features such as the modernity and trend following of insurance companies' technology was evaluated as being ineffective. 5.1.3. Requirements

Regarding consulting service providers, brokers and legal advisors was assessed to have more values than those providing appraisal and training units. This results in a demand for improvement and enhancement of the professional quality of insurance training and appraisal.

The legal framework is required to be modified with higher standards, great transparency as it will ensure a better business environment for all participants of the market; Insurance companies are required to improve their financial ability and meet the demands from competition, growth, and the requirements of new international financial standards such as Basel, Risk- based; Technology application should be encouraged and updated continuously both at the management and enterprise levels in order to be able to timely respond to changes in business trends and globalization. 5.2. Objectives and the development orientation of Vietnam's insurance market (2011-2020) 5.2.1. Objectives of Vietnam's insurance market (2011-2020)

Currently, the Government still continues to implement the "Strategy to develop Vietnam's insurance market for the period of 2011-2020" under the Prime Minister's Decision 193/QD-TTg dated February 15, 2012 with general and detailed goals are specified in related documents.

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5.2.2. The development orientation of Vietnam's insurance market (2011-2020) 5.3. Solutions to develop Vietnam's non-life insurance market in the context of globalization towards 2030 5.3.1. Policy-related solutions - It is vital to diversify and improve the quality of insurance products. Insurance firms should developing by-products to expand the coverage of traditional insurance products which currently are being deployed, develop new products for customers in new distribution channels such as bancassurance, mobile app, develop retail insurance products which focus on the market of individual customers. - It is also necessary to develop and enhance the quality of distribution channels. - Complete the regulations and laws related to insurance management towards integration and meeting international standards - Strengthen the State’s management role 5.3.2. Solutions for insurance companies - Insurance companies should reinforce and improve service quality. 5.4. Recommendations on the conditions to implement the solutions - It is essential to strengthen the financial ability of non-life insurance

companies in Vietnam as it is a vital requirement if all the firms wish to enhance their competence. This can be achieved through the increase of charter capital and detailed attention to reinsurance.

Firstly, the government should have appropriate policies to stabilize the macro-economy, contribute to improving income as well as create opportunities to promote production for businesses and people. Secondly, the welfare policy to support people is required to be synchronous, consistent with the reality in order to have practical impacts on the people, avoid regional disparities and the wealth gap, and reduce the rate of re-poverty due to job loss. Thirdly, the state management agencies on insurance should make efforts to develop a statistical database of risks and losses in all industries in general and insurance in particular to establish the best technical foundation for risk management and insurance premium pricing of Vietnam's insurance market.

- It is neccessary to improving non-life insurers' ability of risk assessment. Insurers should focus on upgrading ability of risk assessment through developing and issuing a specific process and guidance on the exploitation of standards as well as clearly identifying the criteria for risk assessment and specifying them on the insurance claim paper. Insurance firms should also develop a system of criteria and standards to identify risks of each group of profession according to the scale of individuals/corporations in order to detail exploiation standards and contribute to timely and correctlt determine all the risks. Additionally, it is essential to classify the exploitation group and risk appraisal group by clearly assigning specific responsibilities to increase the specialization and gradually standardize each task according to the post and qualifications. Also, insureers should develop and standardize the appraisal process, regulations on indemnity as well as detail guidance on each stage of the work process.

the orientation of

- Insurance companies should improve the quality of insurance human resources. As an emerging insurance market, most of the non-life insurance companies in Vietnam face the issue of human resources in terms of quantity and quality. Each enterprise should consider their development strategy in order to build a methodical plan for the development of their human resources which concurrently can demonstrate their vision.