HANOI: Profits at several listed non‑life insurance companies fell sharply in the fourth quarter of 2025 after a series of natural disasters pushed compensation costs higher.
This underscored the growing impact of natural disaster risks on the sector, according to industry insiders and experts.
Financial statements from 13 listed insurers showed total premium revenue, including both direct insurance and reinsurance, reached 13.7 trillion dong in the quarter, an increase of about 6% compared with the same period in 2024.
Net revenue from insurance operations rose by 5% to around 22.1 trillion dong. The improvement in revenue, however, was overshadowed by rising costs. Insurance business expenses climbed 8% during the quarter, largely due to a spike in claims related to storms and flooding.
As compensation payments increased, profitability from core insurance operations weakened.
Of 12 insurers that disclosed detailed figures, 10 recorded a decline in gross profit from insurance activities.
In total, gross profit from underwriting fell by 32% year‑on‑year to approximately 1.27 trillion dong. To cushion the impact, some insurers relied more heavily on financial investment income.
PJICO, PTI and ABIC reported financial income growth ranging from 21% to 27%, while Vinare recorded a rise of roughly 32%.
For the sector as a whole, financial investment income reached about 3.82 trillion dong in the fourth quarter, up 16% from a year earlier.
Even so, stronger investment returns could not fully compensate for weaker underwriting performance.
With operating expenses also increasing, total pre‑tax profit of the listed non‑life insurers dropped 9% year‑on‑year to roughly 1.64 trillion dong.
Insurance expert Tran Nguyen Dan said the financial performance of non‑life insurers was closely tied to compensation payments because most policies are short‑term, typically lasting one year.
Revenue and claims were therefore recorded within the same accounting period, meaning profits fluctuate depending on the scale of payouts.
“When compensation rises sharply, profits inevitably decline,” Dan said.
In Vietnam, storms and floods often cause the most severe damage to vehicles, residential buildings, factories and production facilities – areas typically covered by property insurance.
Companies with a higher share of property insurance in their portfolios tend to be more exposed during years marked by severe weather events.
Financial reports partly reflect this pattern. During the fourth quarter of 2025, gross profit from insurance operations dropped markedly at several firms, including Military Insurance, PetroVietnam Insurance, Bao Minh Insurance and Saigon-Hanoi Insurance.
The need to maintain liquidity for potential claims also shapes insurers’ investment strategies.
Most companies allocate a large portion of their investment portfolios to relatively safe and liquid assets, such as bank deposits, certificates of deposit and government bonds.
While these assets help ensure that insurers can meet sudden compensation payments, they generally offer lower returns.
Igloo Vietnam general director Tracy Dao said at a recent industry workshop that natural disasters and climate change were increasingly becoming routine operational risks affecting infrastructure, supply chains and business activity.
To adapt, insurers were gradually moving away from standardised products towards solutions tailored to specific customer groups.
Alongside traditional offerings, such as property and engineering insurance for large projects, companies were developing microinsurance products with simpler structures and lower premiums.
These products were intended to expand insurance access for informal workers and employees in smaller businesses. — Viet Nam News/ANN
