Vietnam’s Insurance Industry M&As: Opportunities and Challenges

Posted by Written by Mai Chi Tran Reading Time: 5 minutes

The insurance industry in Vietnam is heating up with a spike in M&A deal activity in 2022-23. In this article, we run through some of the benefits and challenges as well as the regulatory due diligence for foreign firms when it comes to dealmaking in this industry.

The year 2022 was quite positive for the insurance business in Vietnam with demand and awareness of the benefits of insurance increasing steadily. This, coupled with the revised Law on Insurance, created fertile ground for foreign firms looking to enter the market through a merger or acquisition (M&A).

However, along with benefits come some challenges with respect to cultural differences and due diligence processes. In this light, foreign firms should be familiar with the regulatory framework and the market conditions they may face in Vietnam.

Insurance market overview

According to the Vietnam Association of Economic Sciences, the insurance industry was quite active in 2022, with an estimated total insurance premium income of VND 245,877 billion (US$10.4 billion), up around 15 percent over 2021.

This encouraging trend is attributable to the financial stability of insurance firms, the efficient payment of insurance benefits, the improvement of customer care services, and the active use of various insurance products.

Although it is foreseen that the global economy in 2023 will face more difficulties than in 2022, GDP in Vietnam is still expected to grow by 4-5 percent.

Likewise, demand for insurance is also growing, corresponding with a rise in understanding of its significance among the general public in the aftermath of the pandemic. There is also the new Law on Insurance that further strengthens policies related to the sale of and business requirements of offering insurance.

Furthermore, the Government of Vietnam has set a target of 18 percent of the population having life insurance by 2030, according to the Vietnam Insurance Market Development Strategy. This support will be a critical factor driving the take-up of insurance products.

Why the Vietnamese insurance sector is amenable to M&A deals

Access to a growing market with a large customer base

Acquiring an insurance company can dramatically increase a firm’s market share in Vietnam or improve its footing in the Southeast Asian region.

An insurance firm with a bigger customer base may spread its fixed expenses across a greater number of policies. This may result in lower costs for underwriting, claims processing, and other tasks, enhancing operational effectiveness and possibly increasing profit margins.

Diversification of product offerings and business lines

Insurance firms have the chance to expand their product range through M&A. Firms may be able to quickly and cost-effectively expand the range of goods they offer by purchasing or combining with a business that provides complementary insurance products or specialist knowledge. This broader range of products may bring in more clients, improve cross-selling opportunities, and increase sales.

Government support and initiatives

In addition to allowing foreign investors to control 100 percent of the charter capital in Vietnamese insurance businesses, the Law on Insurance Business also reduces needless red tape. By reducing application irregularities that in the past caused hurdles and challenges for insurers, it makes it easier for foreign businesses to complete establishment procedures.

Also, Vietnam has signed multilateral trade agreements that include provisions related to the insurance sector and facilitating market access, and providing greater protections for foreign investors.

For example, ASEAN member states, including Vietnam, have adopted the ASEAN Insurance Integration Framework, which lays out a roadmap for how the region’s insurance industries should be liberalized and integrated.

Furthermore, ASEAN is looking into sub-sectors for liberalization beginning with the cross-border supply of insurance for maritime, aviation, and commodities in international transit (MAT). ASEAN insurance regulators are strengthening their oversight by utilizing the guiding principles of the International Association of Insurance Supervisors (IAIS).


Cultural differences

Cultural differences may be a major factor in restricting M&A activity or limiting their gains. Variations in national, regional, organizational, or even personal culture could be problematic, if not adequately managed. When engaging in M&A with Vietnam firms, there are several things that foreign firms need to know:

  • Vietnamese communication is more often indirect and implicit, particularly when discussing delicate or possibly contentious subjects. To decipher the hidden information being conveyed during negotiations and debates, it is crucial to pay attention to nonverbal signs, read between the lines, and engage in active listening.
  • Because decision-making in Vietnamese corporate culture can be slower than in Western countries, patience is generally valued. Throughout the M&A process, it’s crucial to be patient and adaptable, keeping in mind that discussions and agreements could take longer than foreign firms may be used to.

Conducting due diligence

In every M&A deal, thorough due diligence is essential. That said, finding accurate and trustworthy information may be difficult in Vietnam. A lack of openness, inaccurate or irregular financial reporting, and disparities in accounting standards are common.

Additionally, companies often hire an external valuation agency to determine the worth of another company. However, according to VnEconomy, often domestic firms work slowly or do not produce complete reports. This is sometimes because relevant laws have not kept up with the changes in how businesses are evaluated. Appraisers frequently run into issues, make mistakes, and provide poor service due to a lack of in-depth experience with the assets that are being valued.

Successful case studies

DB Insurance

DB Insurance is among the top three non-life insurance companies in the Korean market. Since it first entered the Vietnamese market more than 10 years ago, this firm has become well-known locally, too.

Aviation Insurance Corporation (VNI) and DB Insurance inked a deal on February 22 this year. This agreement stipulated that DBI would receive 75 million shares or 75 percent of VNI’s charter capital.


Tasco is most well-known for transport infrastructure; however, last year it ventured into insurance. Tasco paid more than VND 402 billion (US$17 million) in the fourth quarter of 2022 to acquire 100 percent of insurance firm Groupama Vietnam. It went on to change the name to Tasco Insurance and invest a further VND 612 billion (US$25.3 million) in the business.

Investment strategies for foreign investors

Identifying suitable acquisition targets

International investors in Vietnam’s insurance sector should conduct thorough market research to understand market dynamics, the competitive landscape, and the regulatory environment. A clear strategy with long-term goals and objectives can help investors to find acquisition candidates that complement their strategic vision.

See also: How Our Business Matchmaking Services Can Help Your Vietnam Market Strategy

Developing an effective integration plan

An effective integration strategy is crucial for foreign investors to optimize operations, utilize knowledge, and ensure a seamless transfer of investment value. This strategy should outline processes, deadlines, and roles with respect to integrating the two companies.

Managing risks and challenges

In the Vietnamese insurance sector, M&As come with unique risks and challenges with respect to due diligence, evaluating financial performance, compliance with regulations, and potential liabilities. To reduce risks, strong risk management measures like contingency plans, compliance monitoring, and talent retention initiatives should be implemented.

Building strong partnerships with local stakeholders

International investors should establish strong connections with regional stakeholders in the Vietnamese insurance industry such as the Ministry of Finance, other insurance companies, and industry groups. Building rapport and fostering trust can help navigate the local regulatory environment and market challenges. Collaborating with local players also provides valuable insights and networking opportunities that can go a long way to forging a significant presence in the Vietnamese insurance sector.

Regulatory framework for foreign investors

According to the new Law on Insurance, foreign investors are allowed to own up to 100 percent of the charter capital of insurance and reinsurance companies through shares or contributed cash.

As stated in Article 99 of this law, investment in insurance and reinsurance must follow a number of guidelines, such as:

  • They cannot borrow to invest in securities, trade in real estate or contribute capital to other businesses.
  • They cannot invest more than 30 percent of investment capital in companies in the same industry/sector. This regulation does not apply to the deposit of money into credit institutions and the sourcing of investment capital abroad.
  • They cannot buy corporate bonds issued with the purpose of restructuring the debts of the issuing company.

Furthermore, they are prohibited from investing in:

  • Trading real estate, except in certain cases such as buying shares of real estate companies listed on the stock market, investing and owning real estate to use as an office, a workplace, or a warehouse facility;
  • Precious metals and gems; and
  • Derivative securities or contracts.


The Vietnam insurance industry is expected to have positive growth with increasing demand as people become more aware of its benefits. The new Law on Insurance will also help to strengthen regulations for foreign insurance firms. While insurance M&A deals has seen some recent success, foreign firms should be mindful of the regulatory fine print, gaps in legal oversight, cultural differences, and the challenges encountered while conducting organizational due diligence.

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