Manulife Financial Corp. plans to increase sales of insurance policies to lower-income earners in Vietnam by expanding into more regions of the Asian country.
Canada's largest insurer introduced so-called microinsurance -- policies that cost clients about $15 a year -- in 2009 through nine Vietnamese provinces, and has sold about 80,000 policies, Manulife Vietnam Chief Executive Officer Carl Gustini said. The Toronto-based insurer plans to sell at least 50,000 more this year as it seeks regulatory approval to operate in an additional 12 provinces.
"The underlying principle is to form a lifelong relationship with these people," Gustini said Thursday in an interview at Bloomberg's Toronto headquarters. "There's also the word of mouth and indirect impact to our brand out in the provinces."
Microinsurance caters to about 70 percent of the Southeast Asian nation that can't afford a typical $400-a-year life insurance policy, Gustini said. Manulife plans to use the product to attract new clients who may become more affluent as Vietnam's economy improves.
"In many cases, the very concept of insurance, the concept of paying a premium and providing a savings benefit, is actually foreign," said Gustini, 47.
Manulife, which competes with insurers including AIA Group Ltd. and Prudential Plc, is the first company to offer microinsurance in Vietnam. Other companies are likely to follow, said the Australian-born Gustini, who has been head of the country's operations since January 2010.
Manulife is also talking with regulators in other Asian countries including Philippines to sell microinsurance. The insurer may also develop family insurance practices under the same design.
The Vietnamese government is also "relatively close" to deciding whether asset-management products such as mutual funds can be sold in the country, said Gustini.
In the first quarter, about 36 percent of Manulife's C$965 million ($997 million) in profit came from Asia. About 1 percent of Asian earnings comes from Vietnam, Gustini said.
"We would expect over time that as a percentage, that will ramp up," said Gustini, who said Manulife has been in Vietnam for 11 years. "Countries like Vietnam are not short-term profit players for us."