Property insurance is growing with the same pace in previous years in terms of written premium even insurers has suffered hard competition. The growing in premium is accompanied with faster growing in risks taken. Fighting the way to compete effectively, penetrating to existing market and exploring new segment are always the unsolved questions for management.
Mapping strategy of Vietnamese insurers has been discussed in some context by individual board of management now and then. Not does any management team try to find out the best measurement to plot out the where-about of their company in the market in comparison with competitors. The measures of the map applicable to insurance business are quite difficult. The marketing and selling model of Vietnamese insurers are almost the same and commonly known method is price cut which means the price war can happen at any time among insurers. Then mapping the positions of competitors is not a requirement.
As the access to customer service as well as business model of each company to find out what kind of strategy of each insurer to compete her way for her existence is impossible, this analysis depends totally on the most accessible information at hands. Though the information taken is just an aspect of the overall view, there would be something to plot out the surface of each insurer’s strategy in relation with all players in the market.
Classification
Some companies possess strong network with big clients, premium rate can be charged at high level and the insureds are quite happy with service provided by insurers. Normally, insurers may be one member of the big organization in which all members have to be insured with its own insurer. Some companies are in an alliance with clients where the members are interdependent. Those insurers are so good at their business and no other competitors can challenge them away from their strategic clients. (Area B)
Some insurers with strong capacity thereby use this advantage to compete effectively. The high-value sum insured is a challenge for other low capital registered insurers. These old friends, moreover, have long built-up experience in the market, especially loss records. Premium will be rated at possible low enough to push other unfamiliar faces away from the game. (Area A)
For SME and other low value physical property owners who are becoming the lead of Vietnamese economy, insurers introduce insurance products by low cost or by hospitable service. Low cost competition insurers (area C) and good quality service insurers (area D) are the rest two types in the mapping as hereunder introduced. Low cost insurers are the hardest workers in the market. They have to find way to cut cost to the bone to create more value to clients, so the margin would be thin. Good service insurers on the other hand may enjoy some higher margin.
Mapping
In the very traditional insurance line, strong network players stand out SVI, UIC and VNI. UIC proves to have unbreakable network with her clients who have quite large property value to be insured. Highest premium rating among other insurers prove UIC to be profitable in this bloody-competitive market. AAA has quite different business model. The figure shows AAA in the position of lowest average sum insured. AAA does not go to compete with our old players, just stays with SME and perhaps more individual customers bought her insurance products. PJI is running away from her old unfavorable fame. In this fire line, PJI goes with low value property insurance with premium rate quoted the second highest. BAC has their internal matter at the beginning of her business, and here in this sketch, BAC may stand out as the one lacking of business planning. Our old friends, BVI and BMI are hand in hand in the field of capacity and competition.
Look at bigger picture with all property business line, there may be a little change of the positions of some players, UIC from the highest quoting premium to highest insured-value insurer. Even premium quoted is lower as a whole UIC proves her to be no other than her strategic planning if comparing to the fire mapping. There is an interesting finding here in the sketch that a group of insurers: HKI, VAS, PTI, PJI, AAA, IAI, stay side by side in the area D where other may or may not realize. Is it profitable or not? The result may be in the few year time. Anyways, large property-value insureds are always difficult to serve and require capacity which only our old friends can provide.
Planning
When a new client approaches, the proposal may show applicable area of this insured. A, B, C, or D would be assigned. For example if the potential client has high value property, and the policy is many time renewed, this client can be plotted into area A where we see BVI BMI and UIC in property insurance and if fire insurance is applied, BMI BVI VIA and GIC are already there. Then if we compete to get this service we should probably face these guys.
Finding out a blue ocean in our market would be priceless answer. It requires more work on sketching, mapping and more critical information at hands. In this only little aspect of the market, there is no good recommendation for strategic planning. However, it is quite clear that some players can go to some where still blank in the map. In Figure 2, there is quite a big blank in the area D, where potential demanding insureds have higher value property to be at risk and premium should be quoted at high in exchange for high quality service. Area D may contains insureds having high risk exposure that a lot of insurers fear to tread. In the Figure 1, the area C can also worth a try. 21.5 million of Vietnamese facing at monitor surfing Internet everyday[i], if IT system is good enough to address this potential segment, low premium low sum insured can be possible since the internal expense cost reduction.
Abbreviations of the names of insurers can be provided upon request.
Abbreviations of the names of insurers can be provided upon request.
[i] http://www.huesoft.com.vn/Tint%E1%BB%A9c/tabid/58/CategoryId/5/itemid/339/Default.aspx date visited 29 Jul. 09
