In an interview with VnEconomy, Nghiem Xuan Thai, CEO of DBV Insurance (formerly known as Joint Stock Insurance Corporation – VNI), analyzed the main drivers propelling the market and shared DBV’s ambitious vision.
INSURANCE GAINS MORE ATTENTION AFTER TYPHOON YAGI
The motor vehicle insurance market in Vietnam has been very dynamic in the last three years. Especially, 2024 was considered a successful year for this market with impressive growth. What, in your opinion, are the main “drivers” behind this achievement?
Indeed, last year witnessed the motor vehicle insurance market maintaining stable growth, although it was not a spectacular breakthrough. I believe there are three main “drivers” behind this performance.
First, the Vietnamese economy grew strongly with a GDP of over 7%, leading to a per capita income of $4,300. This stimulated car ownership, as the estimated sales volume reached nearly 500,000 vehicles, including both new and used cars.
The vibrant automotive market boosted the demand for insurance, especially when the rate of first-time physical damage insurance for vehicles is estimated to have almost reached 40%.
Second, people’s awareness has changed significantly. After Typhoon Yagi in September, which caused damage of over VND 40 trillion, people realized that insurance is not just a cost but a “shield” for their assets and health. There was a surge in customers for motor vehicle insurance, with DBV alone witnessing a significant increase in new orders recently.
Third, insurance companies, including DBV, have leveraged the 4.0 revolution to upgrade customer services. Thanks to technology, the compensation procedure now takes only half a day instead of 2-3 days as before, making it more convenient for customers. This is why the market remained attractive last year.
The market is clearly very potential, but a compensation ratio of up to 52.5% is a notable figure. Can you explain its meaning and the pressures that companies like DBV are facing?
Indeed, a compensation ratio of 52.5% – equivalent to more than VND 13 trillion paid in 2024 – is a challenging issue not only in Vietnam but also in Asia and developed countries. Motor vehicle insurance has a high frequency of losses, ranging from minor collisions to major accidents, causing compensation costs to account for a large proportion of revenue.
For DBV, we have to continuously optimize management costs and reduce car repair costs by simplifying the assessment process and applying technology in management to remain competitive while ensuring service quality.
But from another perspective, the high compensation ratio is also a “living proof” of the usefulness of motor vehicle insurance. Customers are frequently paid, so the demand for participation increases. That is why this product accounts for 35% of the total non-life insurance revenue in Vietnam.
So, in your opinion, is this “pie” still attractive?
As a business person, I find a large market more attractive than a small one. DBV sees not only challenges but also opportunities here. If managed well, we can create significant value. This drives our constant innovation.
INSURANCE FOR ELECTRIC VEHICLES WILL BE A POTENTIAL MARKET
With rising public awareness and booming demand for personal vehicles – from used cars to electric cars – how do you think this trend will affect the market in the next five years?
When people understand the value of insurance, the demand will surely soar. In addition, technology is changing the way we serve customers. For example, at DBV, 98% of motor vehicle insurance claims are currently handled online, saving up to 30% of time compared to before. Customers feel the convenience.
Companies are also competing to bring technology to better serve their customers faster. This competition is a necessary “lever” for the market to develop faster, smarter, and more sustainably.
In the next five years, I believe insurance products will become more diverse, with specific packages for electric vehicles according to the owner’s purpose. Currently, most insurance packages in Vietnam are fixed for one year, but worldwide, people can buy insurance according to the number of kilometers, such as 5,000 km, or for a specific trip.
With flexibility from the Ministry of Finance in adjusting fees, along with technological support, we will soon launch “tailor-made” products for each customer.
Electric vehicles are also a big wave. In 2024, electric vehicles accounted for 12% of total vehicle sales in Vietnam, and I predict this number will increase to 30% in the next 3-5 years. Electric vehicle insurance will develop simultaneously, with new products suitable for the characteristics of this type of vehicle.
How has DBV utilized technology? Can you share your strategic products?
Technology is the core of DBV. With the largest network in the market – over 100 branches nationwide – we couldn’t manage effectively without technology. Therefore, DBV invests heavily in transforming the customer experience into a competitive advantage.
For example, our My DBV app has handled tens of thousands of compensation requests in 2024. When a customer reports an incident, the system automatically locates the nearest assessor, sends a message with procedure instructions, and updates the progress transparently. Customers know exactly the repair progress and when they will receive the money, usually calculated by the hour instead of the traditional way.
We aim to become the fastest compensation insurance company in Vietnam, and technology is the key to DBV’s realization of this goal.
MULTIPLE SOLUTIONS ARE NEEDED TO PREVENT INSURANCE FRAUD
Fast assessment also comes with the risk of fraud. How does DBV balance development and control in this regard?
Fraud is the biggest “headache” in motor vehicle insurance, with an estimated fraud rate of 5-7% of total compensation payments. Technology is both a challenge and a solution. AI can also make fraud more sophisticated, but businesses are not “sitting idly.” With a robust technology platform, we will detect early signs of fraud and effectively contain it.
Currently, DBV is experimenting with AI to analyze data. The system can alert abnormal cases for the professional team to investigate, evaluate, and carefully consider. Thanks to this, we have significantly reduced the percentage related to fraud and abuse in the past year.
It can be affirmed that the development of technology and AI has helped the market, businesses grow while protecting the interests of businesses and genuine customers.
Electric vehicles are a trend in Vietnam. How has DBV approached this market to meet customer needs?
Electric vehicle insurance in Vietnam is still new and accounts for less than 2% of motor vehicle insurance revenue. But with the growth rate of electric vehicles – from 10,000 units in 2023 to 40,000 units in 2024 – this is fertile ground. I believe that in 3-5 years, electric vehicles will account for 30% of the market, and electric vehicle insurance will grow accordingly.
Regarding fees, electric vehicle insurance is usually higher than gasoline vehicle insurance worldwide due to the high cost of battery repairs. DBV is researching flexible packages to be competitive and meet the needs of Vietnamese customers.
If you could propose policies to the state management agency, what would you suggest to support businesses and customers?
What concerns me the most is that Vietnam needs a common database for the motor vehicle insurance market, like Singapore or Thailand, and most major markets have done so long ago.
Currently, each company maintains its data, leading to a lack of a panoramic view. This creates a loophole: high-risk customers can “jump” to another company to enjoy lower fees, pushing up the industry’s compensation ratio.
So, how do we ensure fairness among businesses if we build a common database?
According to current regulations, personal information must be protected, so we only share public data – such as accident history or risk frequency. With a common database, businesses will analyze better and price more accurately: low-risk customers will enjoy lower fees, and high-risk customers will pay higher. This has helped the European market significantly reduce its compensation ratio.
I believe all businesses want this, but we need the Ministry of Finance to take the lead. If we have a common database, we can also connect with the traffic police or hospitals to compensate customers immediately in case of an accident, reducing inconvenience significantly.
It is known that DBV used to be VNI, and this name change has just taken place. Can you explain the meaning of this change and DBV’s future orientation?
2024 is a significant milestone for us. Since February, DB Insurance Korea – the second-largest insurance company in Korea with substantial revenue – has become a major shareholder, opening up the opportunity for VNI to transform into DBV. We have a big dream: to become the fastest compensation insurance company in the market and rise to lead the Vietnamese insurance market stably and sustainably.
As a strategic partner of DB, a large Korean company, we are supported in advanced governance and modern technology. In addition, DB also has a solid financial foundation with an A++ rating, which has helped DBV rise to lead the motor vehicle insurance sector in Vietnam, accounting for 11% of the market share. In 2025, we will launch a series of new products to meet customer needs.
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