Cambodia's insurance industry began in 1990 with just one state-owned insurer and has since grown to 11 insurers. The country’s regulator is attempting to keep up with the sector with the introduction of new rules. The Council of Ministers last week approved changes to the country’s insurance laws. Youk Chamroeunrith, general manager of Forte Insurance, which holds 39 per cent of the Cambodia’s market share, sat down with the Post’s Chan Muyhong this week to discuss the new laws.
What impact will the new laws have on the industry?
This draft law helps insurance companies build a stronger stand in the market as well as offering consumer protection. This new draft law, I think, has opened up the flexibility for the regulator [the Ministry of Economy and Finance] to intervene when the industry is considered not healthy by releasing a subdecree or announcement in addition to the existing law.
There are other changes; for example, we have a glossary of technical terms which makes it easier to comprehend and translate. The process of financial auditing is also clearer, making it easier for operators to follow. Minimum investment capital remains at $5 million. The new draft law has also included the basic six principles of insurance industry applied globally.
Why do we need the new draft law now?
The new draft law comes after industry insiders demanded a new one when the older version of the law proved unable to keep pace with the industry. The older law, which was made in 1995 and was adopted in 2000, is no longer reflecting the market.
What will the new laws cover?
The law is also about consumer protection. Consumers are now aware of the rights they have and how they can act upon those rights. The new draft laws also propose a new department under the Ministry of Economy and Finance to act as mediator to solve complaints from customers towards any insurers who are not willing to pay claims. The purpose is to cut costs and make the insurance companies be responsible to their customers.
Others might think this as more restrictive regulation, but I see it as an advantage for the industry as this draft law will help build more public confidence in the industry.
Article 2 of the draft law is aimed at improving transparency and ensuring fair competition. Have these been problems in the sector before?
Actually, the industry is already transparent because almost all of the insurance companies in Cambodia are audited by an international auditing firm. This industry is almost the second most transparent industry after banking. Companies that are not transparent about their financial reporting will not be able to get reinsured by companies abroad.
Regarding the fair competition, it happened that some companies said they could cover the same insurance product with a lower standard premium, but when problems occur they made excuses, saying the claim could be paid only under some conditions. This frustrated customers.
Article 8 says contracts and agreements should be written in Khmer. Will this be a challenge for the industry?
Normally, the law in any country would prioritise their native language. However, it is a challenge for the industry because we lack words to identify certain terminology used in the industry. We have based our agreement sample on those from the UK and other countries that are more advanced in the insurance industry. [This is where] the glossary is very helpful.
How is the sector changing?
We’ve seen life insurers entering the market and attracting middle-income clients. People now have more understanding of the benefits of insurance. We can’t project a certain time for the industry to reach its peak since it really depends on the economy.
This interview has been edited for length and clarity.