Vietnam’s life insurance sector is set to experience a contraction in 2025, with a projected decline of 1.3%, bringing the gross written premium (GWP) to $6.0 billion, down from $6.1 billion in 2024. This follows consecutive declines of 12% in 2023 and an estimated 5.7% in 2024, primarily driven by challenges in bancassurance sales and broader economic difficulties.
Despite this downturn, the market is expected to rebound in 2026, with growth projected to be supported by an aging population, rising household incomes, low insurance penetration, and ongoing regulatory reforms. According to data from GlobalData, the market is forecasted to grow at a compound annual growth rate (CAGR) of 3.2% from 2025 to 2029, potentially reaching VND165.4 trillion ($6.4 billion) by 2029.
Challenges Affecting Consumer Confidence
Swarup Kumar Sahoo, Senior Insurance Analyst at GlobalData, points to irregularities in life insurance distribution as a key factor behind the market’s decline. These issues, including false commitments, unclear policy provisions, mis-selling, and the practice of bundling life insurance with bank loans, have eroded consumer trust and led to a sharp increase in policy cancellations. Consequently, the number of active life insurance policies fell by 7.5% in 2023 and is expected to decline by another 3.7% in 2024.
Insurance penetration has also taken a hit, dropping from 1.9% in 2022 to 1.5% in 2023, and it is anticipated to reach 1.3% in 2024. “Amidst the crisis of consumer confidence, strict regulations to control these irregularities and demographic changes will help support the market’s recovery,” Sahoo explained.
He further noted that the low penetration rate of life insurance in Vietnam—much lower than in other Asia-Pacific countries such as Thailand (3.5%) and Taiwan (8.7%)—presents significant growth opportunities for the sector.
Regulatory Reforms to Restore Trust
A key development aimed at stabilizing the market is the revised Insurance Business Law, which came into effect in November 2023. The law now prohibits the sale of life insurance products before and after 60 days of loan disbursement and imposes fines on banks that tie non-mandatory insurance to loans. These regulations are intended to rebuild consumer trust and curb the practices that have led to policy cancellations.
Dominance of Endowment Insurance and Market Trends
Endowment insurance remains the dominant product in Vietnam’s life insurance market, accounting for 86.1% of GWP in 2024. The demand for these products is expected to rise, particularly with the introduction of savings policies that cover critical illness and hospitalization, offering benefits for the country’s aging population.
Technological innovations, such as artificial intelligence, big data analytics, and digital platforms, are set to improve customer experience and service quality, further supporting market recovery. Additionally, supplementary insurance, which represented 12.3% of the market in 2024, is anticipated to grow to 13.7% by 2029, with a projected CAGR of 4.9% from 2025 to 2029. Insurers are increasingly focused on expanding coverage and enhancing service offerings to attract more customers.
Positive Outlook for the Future
Looking beyond 2025, the outlook for Vietnam’s life insurance market is positive. Sahoo concluded, “The stricter regulatory environment, technological advancements, and a focus on customer-centric products are expected to drive growth in the coming years.” Rising healthcare costs and the aging population will further contribute to demand, ensuring steady growth and market stability moving forward.
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