On average, each Taiwanese person holds two life insurance policies. Despite not being a financial hub like Hong Kong or Singapore, Taiwan boasts one of the world's leading life insurance markets.

The industry's scale is notably large, with total insurance assets accounting for 150% of its GDP, placing it among the highest globally. Consequently, many large-scale financial groups have emerged in Taiwan, with life insurance serving as a cornerstone.

According to a Cathay executive, one of Taiwan's two largest financial 'chaebols', the robust development of the life insurance sector stems from various structural factors within the economy and society.

These include a rapidly aging population, a culture that values saving, and a prolonged low-interest rate environment, all of which have boosted insurance demand.

"Taiwanese consumers view insurance as an essential part of their financial lives", a Cathay executive stated. Amidst a rapidly aging population, insurance not only helps protect health but also plays a role in financial allocation and long-term investment planning. Currently, the company serves up to two-thirds of the island's 23 million residents.

Headquarters of Cathay Financial Holdings - one of Taiwan's two largest financial chaebols. *Photo: Do Nguyen*

A Cathay representative noted significant differences in insurance behavior and demand in Vietnam compared to Taiwan, primarily due to market development levels and demographic structure, rather than core perceptions of insurance.

Research by Prudential indicates that Vietnam's total insurance market size currently represents only about 3% of its GDP, matching the average for six Southeast Asian countries but considerably lower than the global average of 6,7%.

Ngo Trung Dung, Deputy General Secretary of the Vietnam Insurance Association, observed that Vietnamese people tend to be hesitant to discuss risks and purchase insurance. Consequently, awareness of insurance's role, especially life insurance, remains limited.

According to Cathay executives, the insurance market is still in its development phase, characterized by a young population. People primarily view insurance as a tool for risk protection, particularly for health, accident, and family welfare risks, rather than a long-term investment channel.

Furthermore, demand for financial solutions related to children's education also differs between the two markets. With a large young population, many Vietnamese families prioritize investing in their children's education and future orientation, thereby generating high demand for educational funds and study abroad plans.

In contrast, in Taiwan, the low birth rate trend has led to a shrinking young population. While demand for educational financial products still exists, the market size is generally significantly smaller compared to Vietnam.

In Vietnam, Cathay has invested over 1 billion USD across two main sectors: insurance and banking. According to group executives, Vietnam is a strategic market in Southeast Asia and will see continued expansion in the near future.

Experts believe Vietnam's insurance sector has substantial growth potential, capable of positively impacting the economy. Prudential's research indicates that if insurance penetration (both non-life and life) increases by 50%, GDP and per capita GDP could rise by 4,1% and 2,5% respectively.

Quynh Trang