Life insurance market grows
WEF forum to bring new investment
TWO new life insurance companies will launch operations in Cambodia by the end of this week, aiming to grab hold of a market that has seen rapid expansion in recent years while also creating stronger competition in the emerging industry.
Bangkok Life Assurance (Cambodia) Plc launched operations on Tuesday with Hong Kong-based panAsian insurer AIA scheduled to debut on Friday. They join a market already populated by four other life insurance providers.
Life insurance is a relatively new product in Cambodia, first entering the market 2012, though the industry has grown impressively with a 95 percent increase in gross premiums reported in 2016 alone. However, the customer base remains small with only 51,000 new policies for the same year, according to the recent annual report by the Insurance Association of Cambodia (IAC).
The gross premium value was measured at $43 million for 2016 with a recorded total sum assured reaching over $1 billion.
Speaking at the official launch of Bangkok Life Assurance (Cambodia) on Tuesday, Nguon Sokha, secretary of state for the Ministry of Economy and Finance, said that life insurance gross premiums accounted for 31 percent of the $120 million in gross premiums recorded last year.
“The growth of the life insurance sector reflects the increasing trust of Cambodians for new financial products,” she said.
Ngeth Chou, senior consultant at Emerging Markets Consulting, said that there is plenty of room for growth in the life insurance sector when compared to Cambodia’s more developed neighbours. He added that insurers operate with long-term strategic planning and often wait for years before turning a profit, but the new players show that investors have confidence in the local growth potential.
“While the number of players is a bit overcrowded at moment, there is still potential for longer term growth providing that the number of insurance policies continues to increase,” he said. “However, in the short term, the companies will fight [to gain a market share] due to Cambodia’s small population and low awareness of financial products.”
He added that the six established players should work to educate the population about life insurance products before the government considers granting more licences.
Methit Mukdasiri, director of Bangkok Life Assurance (Cambodia), said that Cambodia was the first country where the company had expanded to outside of Thailand and that the Kingdom’s youthful demographics boded well for a promising insurance venture.
“The market is still growing and it is not too late to enter because it is still very young,” he said. “Life insurance is a long-term business. It is like running a marathon and we need to have a good plan and strategy to grow.”
Robert Elliott, CEO and general manager of Manulife Cambodia, said that life insurance market penetration in Cambodia remained very low, at approximately 0.2 percent of GDP, compared to the rest of Asean with a market penetration of up to 4 percent.
“As more life insurance companies come in, I believe they will bring more innovations and variety of products and services into the market,” he said. “The industry will be bigger and therefore more Cambodian people will be covered by life insurance.” WITH the World Economic Forum (WEF) on Asean less than a week away, government officials yesterday said that the theme of the three-day event would focus on “Youth, Technology and Growth”, while providing an opportunity to raise Cambodia’s international profile and attract more investors and tourists.
The forum taking place in Phnom Penh will be the WEF’s 26th meeting in the region, and will focus on how Asean can harness the potential of its young demographics, and benefit from the transformative impact of the Fourth Industrial Revolution.
“We believe that we will attract more foreign investment to Cambodia after successfully organising the event,” Sun Chanthol, minister of public works and transportation, said yesterday at a preevent conference. “There will be more job opportunities for Cambodia’s youth and higher wages.”
According to Chanthol, more than 600 participants representing businesses, governments, international organisations, civil society and the media are expected to participate in the gathering.
He added that prime ministers from three foreign countries including the Philippines, Vietnam and Laos will join the event. There will be 18 other ministers representing countries from Asean and other regions as well as six representatives from large international firms. There are 217 journalists registered to join the forum, 129 of them local, according to Chanthol.