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Logo of Phnom Penh Post newspaper Phnom Penh Post - Micro-insurance rules nearly finished

Micro-insurance rules nearly finished

CAMBODIA’S micro-insurance industry could launch as soon as August, as officials say rules governing the sector are nearing completion.

The Ministry of Economy and Finance aims to hold a meeting to receive public feedback this month before finalising regulations drafted last year, the Ministry’s Insurance Division Head In Meatra said.
“We hope that we will launch [micro-insurance] sometime in August or later this year.”

In Meatra emphasised the importance of raising awareness among Cambodia’s rural population about the benefits of micro-insurance, adding the insurance offered would include coverage for health, death and livestock, among others.

The plan to launch micro-insurance had been proposed by the private sector in order to improve the industry at the grassroots level, he said, adding that many ASEAN countries, such as Thailand, Vietnam and the Philippines, had already begun developing the industry.

Strong regulation in the Philippines had led to a successful micro-insurance industry, according to In Meatra. He said Cambodia was on track to have similar legislation.

General Insurance Association of Cambodia Chairman Chhay Ratanak said the group had met with the Ministry in the last two weeks to discuss finalisation of the rules.

“The plan is very good to help low-income people get insurance, and the government especially wants to convince them of the benefits of having insurance,” he said.

He said that while micro-insurance offers fewer profits than other industries, many private companies are still interested because it offers a way to help Cambodia’s poor. He also pointed to a potential boost in tax revenues.

The Finance Ministry’s In Meatra said the capital requirement being discussed to operate a micro-insurance business was US$200,000, though that had yet to be finalised.

Forte Insurance General Manager Youk Chamroeunrith said his company received permission from the MEF to implement a trial micro-insurance service in some of the provinces surrounding Phnom Penh.
The trial, now a month old, is being used to gauge reaction of low-income people in the area, though it was still too early to measure the results, he said.

Youk Chamroeunrith said the project is a joint venture with a local partner, however he declined to disclose its name.

“We’re not focusing on profit, given the premium is so small. It’s more about corporate responsibility,” he said.

In 2010, Forte signed a Memorandum of Understanding with Prasac, Cambodia’s largest microfinance institution, to sell micro-insurance.

Prasac would earn an 8-percent commission for every $100 premium, MFI General Manager Sim Senacheert said last year. A rural client would pay a premium of $6 per year, and, in case of hospitalisation, the insurer would pay back $5 a day.

Infinity Insurance Chief Executive Officer David Carter said that while he supported the micro-insurance initiative, the regulation had to both encourage growth while “limiting its horizon to small enterprise.”

“As the capitalisation level for micro-insurers will be lower than the insurers in the current market, the government has to ensure that there is no unfair competition from these new entrants to the insurance market,” he said.

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