vi

TABLE OF CONTENTS
ACKNOWLEDGEMENT i
ABSTRACT ii
TÓM TẮT iv
TABLE OF CONTENTS vi
LIST OF TABLES ix
LIST OF FIGURES x
LIST OF DIAGRAM x
INTRODUCTION 1
CHAPTER 1: BASIC ARGUMENTS ON COMPETITIVENESS IN
NON-LIFE INSURANCE BUSINESS 4
1.1 Concept and feature of insurance business activity 4
1.1.1 Concept on insurance business activity 4
1.1.2. Feature of insurance business activity 5
1.2. Non-life insurance business activity 6
1.2.1 Concept on non-life insurance business 6
1.2.2. Operation content of non-life insurance enterprise 6
1.2.3. Criteria for evaluating the product‟s competitiveness 16
1.2.4 Necessity to improve competitiveness of product in international
economic integration condition 21
1.3. Overview of non-life insurance market in 2011 23
1.4. Competitiveness of non-life insurance enterprise 24
1.4.1. Competitiveness and competitiveness forms 24
1.4.2. Competitiveness of non-life insurance enterprise 27
vii

1.4.3. Factors reflecting competitiveness of non-life insurance enterprise
31
1.4.4. Some factors affecting to competitiveness of non-life insurance

3.2. Solutions for PTI insurance enterprise aimed at improving
competitiveness in the market 79
CONCLUSION 100
REFERENCES 101

ix LIST OF TABLES

No
Subject
Page
Table 1
List of non-life insurance enterprises operating in Vietnam
insurance market
46
Table 2
Revenue of non-life insurance premiums in the entire market
of Vietnam
48
Table 3
Market share of some non-life insurance enterprises
(period 2009-2011)
49
Table 4
Charter capital of some non-life insurance enterprises
(2007-2011)
52
Table 5

Total investment value of PTI over the years
72
Table 15
Market share of PTI in Vietnam insurance market
(period 2007 - 2011)
74 x

LIST OF FIGURES No
Subject
Page
Figure 1
Market share of non-life insurance Companies in 2011
75
Figure 2
Market share of original insurance Companies in technical
operations (2011)
77
LIST OF DIAGRAM

1
Organization diagram of PTI

2

 Throughly research current theories of competitive theory including:
Non-life insurance activities, competitiveness capacity of non-life
insurance company, competitiveness forms and the necessity to
improve competitive capacity.
 Analysis the real situation of competitiveness capacity of PTI and point
out the position of the company in the market.
 Recommendations to PTI aimed at improving competitiveness
capacitiy of PTI‟s non-life insurance company.
1.3 Research questions
In order to give recommendations to improve PTI competitiveness
capacity, the thesis should finding answers for the following questions:
 Why PTI need to improve their competitiveness capacity?
 How to improve PTI‟s competitiveness capacity?
 What are solutions for PTI to improve their competitiveness capacity?
1.4 Research methodology
In the thesis, the author adopts statistic and analytical methods to
identify the most suitable solution for PTI for improving their effectiveness in
administrative and business activities in order to improve competitiveness
capacity.
Both primary and secondary data used in this thesis to analyze current
situation of competitiveness capacity of PTI. Based on the theories of PTI
and the author‟s own judment, the author presents the operation result and the
position of PTI in the market and gives suggestions to improve PTI‟s
competitiveness capacity.
1.5 Scope of the research
The thesis aims to find solutions to improve competitiveness capacity
of PIT. The thesis focus on:
3

that the enterprise pays the insured amount to the beneficiary or compensates
the insurance buyer as happening the insured events. This concept expresses
clearly the following contents:
Firstly: Insurance business has the economic and profit purpose, this is the
purpose which the insurance enterprises direct toward. Only by gaining the
profit, can the insurance enterprise exist and develop in the condition of the
market economy. Profit helps the enterprise pay off to the individuals and
organizations and provide capital for itself. High profit level also helps the
enterprise maintain the reserve fund source which is big enough, limit the
assignment and re-insurance and have condition for improving the income
level for personnel. Besides the profit objective, the insurance enterprise must
5

meet the demand of the customers, help the customers stabilize their life and
business production as having sudden loss and damage happened to them, at
the same time, the insurance enterprise is responsible for implementing fully
the obligations to the State. Besides, the appearance of the insurance business
form also contributes to guaranteeing the safety and stability for the society to
develop stably.
Secondly: The nature of the insurance business activity is that insurance
enterprises accept the risk which is transferred to them by insured party; that
means they accept to pay the insured amount or compensate as happening the
insured event. On the contrary, the insurance enterprise will collect the
premium, this revenue source will form the reserve fund, compensation fund,
pay off other related and profitable insurance costs. However, the insurance
enterprise only accepts the insurance for the risks which will happen in the
future and have unexpected, unreliable nature and do not depend on subjective
desire of the person insured… The specific characteristics of the insured risk
express the scope in which the insurers must determine and select. This thing
also affects partly to the business activity of the insurance enterprise.

life insurance”.
1.2.2. Operation content of non-life insurance enterprise
1.2.2.1. Business of original insurance operations
a. Feature
This is the basic activity, basis for the existence of the insurance enterprise.
This activity is an uninterrupted process from the stage of issuing the
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application to the person insured, collecting the premium, monitoring the
process of implementing the insurance Contract, assessing the loss and
settling the insurance compensation.
The enterprise implements the activity of original insurance business
according to some operations, thence collects the premium and implements its
main function which is to form the monetary fund from the contribution of the
majority to compensate the damage and loss of some individuals, contribute
to stabilizing the business production and the life of the person insured.
The procedure on implementing the activity of original insurance business
start from the work that insurance enterprise through agent network or
employees exploits, offer the insurance services to each customer object
having demand. As both Parties agree the basic conditions in order to enter
the insurance contract, the person having demand on participating in the
insurance will send to insurance the request or requirement on being provided
the insurance service, on that basis, the insurance contract is established and
signed. The contract is the legal proof showing the establishment of rights and
obligations between both Parties: insurance enterprise and person insured.
According to the regulations of the Law on insurance business (Article 17,
Article 19 and Article 20), the insurance enterprise has the following basic
rights, obligations and responsibilities:
- Obligation to compensate for pay the insured amount timely to the person
insured or the beneficiary.

Through the result of the activity of original insurance business, the insurance
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enterprise will show its position and image, thereby promote its
competitiveness in the market and especially in front of the competitor. The
result from insurance business work is the foundation and basis for insurance
enterprise having sufficient potentials to expand the activity and strengthen
the investment activity aimed at bringing high profit and sustainable
development.
b. Division of non-life insurance operations
Depending on different division method, the non-life insurance operations can
be divided into the following basic types:
b1. Classification under the insurance object
According this method, it is divided into three groups: Property insurance,
civil liability insurance, non-life human insurance.
- Property insurance: This is the type of insurance in which the insured object
is property (fixed or current) of the person insured. For example, insurance for
the material damage of mechanical vehicle, goods insurance of the goods
owner in imported and exported goods insurance, property insurance of the
house owner in robbery insurance. The insurance value is the actual value of
the insured property; it is the important base to calculate the premium and
payment limit of the insurance compensation money.
- Civil liability insurance: the insured object is the civil liability of the person
insured for the third person in accordance with the law. For example, the civil
liability insurance of the mechanical vehicle owner, civil liability insurance of
the employer, public liability insurance etc… are different from property
insurance and human insurance; the object of the civil liability insurance is
abstract. The civil liability insurance applies some principles such as:
compensation principle, legal right transfer principle.
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have to comply with in accordance with the united regulations of the law.
- Voluntary non-life insurance: is the type of insurance in which the person
insured has full right to select according to his demand and desire, the
insurance contract is signed on voluntary basis between the insurer and the
person insured.
1.2.2.2. Reinsurance business
Reinsurance is the operations which the insurer use to transfer a liability part
accepted with the person insured for one any many other insurers on the basis
of transferring to that person a part of the premium.
Reinsurance is a very important activity and always goes abreast with the
original insurance business; it is considered as the shield for the operation of
each insurance enterprise, a form which the insurance enterprise insures for
itself after receiving all risks of the customers. At the same time, the
reinsurance activity also helps the enterprise have more revenue source, thus,
this activity is attached special importance.
Reinsurance business includes the activity of agreeing the reinsurance and
activity of transferring the reinsurance.
a. Agreeing reinsurance
Agreeing the reinsurance means an insurance enterprise accepts the insurance for
a risk part of other insurance enterprise in an original insurance contract. In the
view of insurance business, the activity of agreeing the reinsurance is a form of
selling the insurance. After agreeing the reinsurance, the person agreeing the
reinsurance can transfer the reinsurance to other people agreeing the reinsurance.
The activity of agreeing the reinsurance has the purpose of increasing the
12

revenue source from premium for the enterprise, besides, the greater purpose
of the activity of agreeing the reinsurance is to share the risks between the
insurance enterprises. In the mixing relation in the market, an insurance
enterprise sometimes stands at the position of the person receiving the risk but

reinsurance transfer helps insurance enterprise stabilize the financial situation;
helps customer participating in insurance feel secure about the compensation
payment ability of the insurance enterprise; helps insurance enterprise be
active in calculating the maximum financial liability limit at any certain point
of time; help share the risks in community… Thereby, create for insurance
enterprise the best competitiveness to develop its activity of original
insurance business.
Being similar to the activity of receiving reinsurance but at reverse position,
the reinsurance transfer Company also has to transfer to the Company
agreeing reinsurance a part of the original premium corresponding to the
liability part to be transferred. In return, reinsurance transfer Company will
collect a certain amount of reinsurance commission under the agreement from
the Company agreeing the reinsurance. The liability for settling the
compensation and claim arising from original insurance contract will be
shared between the transfer Company and agreeing Company under
reinsurance contract.
However, in both cases of transferring and agreeing reinsurance, the clue to
settle compensation and claim with customer still is original insurance
Company - the one directly signing the insurance contract.

14

1.2.2.3. Assessment, compensation and claim to third person
Insurance enterprise can also implement directly the activity of assessment,
compensation and claim to third person to serve the business activity of the
enterprise or be the agent implementing service on assessment, compensation
and claim to third person for other insurance enterprises.
In the consideration of the angle being activity serving the direct insurance
business activity of the insurance enterprise:
Assessment is the activity implemented directly by insurance enterprise or

assessment, compensation as the insured event happens is necessary, it
contributes to settling quickly the rights for customer participating in
insurance, improving product quality of the enterprise. For some big,
prestigious enterprises having apparatus for implementing the assessment,
compensation professionally, the supply of this service brings relatively great
incomings and has special significance in the condition that the activity of
original insurance business is more and more difficult.
1.2.2.4 Investment activity
Besides the original insurance business activity of the Company, the
investment activity also brings a relatively great income source for the
enterprise. The profit source from the investment activity helps the enterprise
improve its financial considerably; therefore, all insurance enterprises in the
world place the investment activity parallel with the insurance business
activity, and these two activities have assistant and supplementary relation to
each other.
The insurance business activity has reverse business cycle; it means the
16

enterprise will have revenue first and the business cost is determined later.
For this characteristic, the insurance enterprises always hold a very great free
temporary capital amount. And of course, to take full advantage of this capital
resource, the insurance enterprise will use it to invest into the fields permitted
by the State such as: depositing at the bank, buying public bond, investing
into securities, contributing capital into joint venture, investing into real
estate… The profit from the investment activity will help the enterprise
improve the financial , thereby, increase the ability of paying insurance to the
customers.
According to the statistics of some big insurance Companies in the world, the
revenue of insurance premium gained from insurance business activity is
often approximate to the amount of money which the enterprise has to

To evaluate the growth speed of the product, criteria of the revenues of sold
product.
The comparison of revenue growth speed shows the enterprise‟s product
consuming level compared with the competitors in the same field. This
criterion is more advantageous than the market share criteria in the way the
enterprise cannot define the whole consumption of whole market, especially
in so big market. On addition, in case of so small or insignificant market share
this criteria does not have much meanings and in this institution, it is more
meaningful to compare the revenue growth speed with competitors.
18

1.2.3.2. The market share of the product
The market share of a product evaluating its ability to occupy that market.
The bigger market share the stronger its competitive is. That the market share
of an enterprise or a nation increases or decreases reveal their competitive
with other competitors.
The product‟s market share in a specific market is defined via the formation:
The product‟s market share (%) = x 100
This criterion shows the market occupation, role and position of that product
on the market. In the international market, this criterion is used to evaluate the
efficiencies of export activity of each nation because the common target of
export nation is to enlarge the market share for its product.
Therefore, to exist and compete strongly, the product has to occupy an
amount of market share whatever much or little. Therefore, w can evaluate the
product‟s competitive , strong point or weak point compared with other
competitors in that field.
1.2.3.3. The product’s attraction on design and pattern
The unique and attraction in the product„s design and pattern is an important
factor affecting strongly on the product consumption . Among the criteria to
choose a product, the pattern is almost paid more attention although the

credit.
20

1.2.3.5. The profit rate
The purpose of business is to bear profit, of enterprise establishment is to seek
for profit and act on profit. Therefore, profit is the most efficient measurement
of the competitive strength of enterprise.
The profit is the balance between the revenues and the cost spent during the
business activity. To evaluate the business management the criteria of profit
rate is used.
Profit rate is the criteria reflecting the profit that an enterprise gains in a
certain time per one unit revenue from selling pure product.
This criterion is defined as following:
The profit rate =
The profit rate reflects the competitive of enterprise, the management ability
of board of directors. Because if this criterion is low, it means that the
competitive level on the market is very hard so competitors have to decrease
price to take over the market. In converse, if this criterion is high, it means
that the consumption market of this enterprise is quite advantageous and the
competitiveness level is not high now.
It can be said that, the profit rate is one criteria helping to reflecting clearly
the competitiveness of enterprise. Therefore, during the operation, enterprise
should continue improving technology, reduce the production cost, maintain
the price stability to keep the competitive of product and prevent other
competitors to penetrate in the market any time.