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Logo of Phnom Penh Post newspaper Phnom Penh Post - Insurers chart a growth path

Tuk-tuks advertising life insurer Manulife drive in a line on Diamond Island in Phnom Penh in 2013.
Tuk-tuks advertising life insurer Manulife drive in a line on Diamond Island in Phnom Penh in 2013. Heng Chivoan

Insurers chart a growth path

Cambodia's insurance industry saw impressive growth last year as general insurance continued to make positive strides, while life insurance accounted for the largest upswing by percentage, according to an annual report by the Insurance Association of Cambodia (IAC).

Overall gross premiums grew by 35.6 percent last year, swelling from $83.7 million to $113.6 million, according to the report. General insurance grew by 14 percent, while life insurance grew by 95 percent, though from a low base.

“In 2016, the industry recorded over 51,000 new life insurance policies with total sum assured of over $1 billion,” the report said, adding that it was backed by first-year gross premiums that totalled $24.4 million, a 58 percent increase compared to 2015’s figure of $15.4 million.

While the IAC report noted that life insurance was a relatively new product, only entering the Kingdom in 2012, the industry has grown to encompass five life insurance providers. More are expected to enter the market this year, including pan-Asian insurer AIA.

Robert Elliott, CEO and general manager of Manulife Cambodia, said life insurance premium growth was largely attributable to the success of private sector-led educational and awareness campaigns about the benefits of financial planning.

“The remarkable increase of life insurance premium means more people started to trust life insurance companies and therefore allow us to protect their financial future,” he said.

“This is also a big success for the financial industry as well, as we’ve been working closely with the Ministry of Economy and Finance to educate this new market about the advantages of life insurance.”

According to Elliott, the growth of life insurance is a key indicator for the overall economic development of a country, and as the sector matures, capital generated by insurance companies can further drive economic growth.

“As premiums are collected from customers, capital is mobilised and then invested by the life insurance company into various long-term assets classes, including government and corporate bonds,” he said.

“This, in turn, fuels economic activity.” Ngeth Chou, senior consultant at Emerging Markets Consulting, said while the numbers were a positive sign for both life and general insurance companies, as it showed increased awareness of product benefits, the level of premium growth was misleading.

“This is not a significant increase as premiums collected by life insurers are generally not pure premiums,” he said.

“They also include a long-term saving component and most life insurer clients are also bank clients. Simply put, it represents a small portion of white-collar workers who could have access to banking services.”

Chou said life insurance companies have a commendable long-term vision, seeing that most large corporations expect to face losses for the first eight years of operations in a developing market. He said the government could do more to support the sector’s growth.

“To my knowledge, there are many things that need to be done at the policy and regulatory level . . . to unlock growth of the sector,” he said, adding that a government-planned financial literacy program handled by the Ministry of Education, Youth and Sports and the National Bank of Cambodia was a core starting block.

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