Guarantee insurance and corporate credit insurance have seized the opportunity?

The non-life insurance market in Vietnam is undergoing a strong transformation with impressive growth rates. In particular, the demand for credit insurance and guarantee insurance from both domestic enterprises and foreign investors is increasing. In particular, after the Bidding Law No. 22/2023/QH15 came into effect from January 1, 2024, it has created a solid legal framework for bidding projects, while promoting the sustainable development of the insurance industry in Vietnam.

According to a report by the world's leading reinsurer Swiss Re, the total global premiums for credit and guarantee insurance are estimated to have reached around US$33 billion by 2022. Premiums for these two product lines have increased by an average of about 5‒6% annually over the past 20 years, higher than total property and casualty insurance premiums (~2% growth per year) and almost equivalent to global GDP growth over that period (5.5%).

For the Asian market during this period, in 2022, the guarantee and credit insurance sector in Korea achieved revenue of 1.80 trillion KRW (1.40 billion USD), accounting for 5.6% of the total revenue of the country's non-life insurance market, showing many positive highlights in the development of the industry.

Guarantee Insurance: Protecting Investor Rights

In Vietnam, after officially taking effect, the Bidding Law No. 22/2023/QH15 has played an important legal role for the use of guarantee insurance certificates, to ensure the contractor's responsibility in bidding activities and project implementation.

The specific provisions in Article 14 (Bid Security), Article 68 (Contract Performance Security) and Article 75 (Investment Project Contract Performance Security) help create a solid protection mechanism for the interests of stakeholders when participating in and promoting efficiency in bidding activities.

Specifically, guarantee insurance guarantees the obligations of the guaranteed party in contracts. If the guaranteed party fails to fulfill its obligations, the insurance company will pay the other party, thereby protecting the interests of the participating parties. Currently, the guarantee insurance market in general and contract obligation guarantee in particular in Vietnam has developed a number of prominent types, including:

Bid Security: Guarantees the rights of the Investor if the Contractor/Guarantee has won the bid but does not sign the contract.

Contract performance guarantee: Ensures the rights of the Investor when the Contractor/Guaranteed Party fails to fully perform its obligations under the contract.

Advance payment guarantee: Guarantees the rights of the Investor when the Contractor/Guaranteed Party misuses or fails to return the advance payment.

Warranty guarantee: Guarantee the maintenance and warranty obligations of the Contractor/Guaranteed Party during the warranty period.

Bao Viet Insurance's guarantee insurance program with low deposit rates and reasonable insurance premiums helps contractors not reduce their credit limit with banks, thereby freeing up cash flow. Contractors do not need to deposit or have collateral for 100% of the guarantee value. This brings many great benefits, helping to protect the financial capacity of contractors as well as investors.

Credit Insurance: Essential Solution for Businesses

In addition to Guarantee Insurance, Credit Insurance is becoming an essential solution for businesses in an increasingly competitive market. This product protects businesses from the risk of not being able to collect debts from customers, minimizes financial losses and opens up opportunities to expand into new markets. When businesses are assured that their credit risks are protected, the motivation to invest and develop increases.

In the Vietnamese market, trade credit insurance has been widely deployed with types such as domestic trade credit insurance, export trade credit insurance and trade credit insurance for single buyers.

In addition, the credit insurance buyer assessment service is performed by leading experts with a global scope, giving businesses a clear view of the financial situation of customers anywhere. This improves credit management and facilitates access to bank loans. Financial institutions also often give priority to granting credit to insured businesses, contributing to promoting sustainable development in the future.

Bao Viet Insurance is proud to be the oldest insurance brand in Vietnam.

Understanding the market demand and the importance of ensuring safety in business, Bao Viet Insurance is always actively developing diverse insurance programs, helping businesses feel secure in investing, managing risks and promoting sustainable growth. In particular, guarantee insurance and credit insurance are outstanding products that have been deployed by Bao Viet Insurance, welcomed by customers and the market thanks to their ability to ensure solid finance, meeting the diverse needs of businesses in large investment projects, construction, sales and service provision.

Cooperation to promote guarantee and credit insurance in Asia

AGCIA Annual General Meeting held in Vietnam for the first time

With 60 years of pioneering in the non-life insurance industry, Bao Viet Insurance is proud to be the first and oldest insurance brand in Vietnam. As one of the co-founding members of the Asian Credit and Guarantee Insurance Association (AGCIA), the company is committed to always being ready to share experience, knowledge and resources with international partners, contributing to the creation of a sustainable insurance ecosystem.

The congress took place on October 23-24, 2024 in Hanoi , gathering delegates from 9 countries: Vietnam, Korea, Netherlands, Germany, Philippines, Laos, Mongolia, Cambodia, Indonesia from credit rating organizations, credit funds, insurance companies, reinsurance and guarantees leading in the region.

Delegates will engage in in-depth discussions, share new trends and explore cooperation opportunities in the credit insurance and guarantee industry, and discuss the role of credit insurance and guarantee in the sustainable development of the global economy .

This includes developing new cooperation models to enhance access to insurance services for businesses, thereby supporting economic growth and creating value for the community. At the same time, delegates will also review current policies and regulations in the insurance sector to make recommendations to promote the development of the credit and guarantee insurance industry in Vietnam as well as in the region.

The 5th AGCIA Annual General Meeting in Hanoi promises to be an important step forward, opening up new opportunities for development and cooperation in the insurance industry in Vietnam and the region.

Source: https://www.congluan.vn/bao-hiem-bao-lanh-va-bao-hiem-tin-dung-doanh-nghiep-lieu-da-nam-bat-duoc-thoi-co-post317237.html