Cambodia’s insurance industry is slowly emerging, from a single pioneering provider – the state-owned Cambodian National Insurance Company – opening up in 1990 to 11 firms today. Companies now offer a broader range of products, including micro-insurnace options. In mid-2012, Prévoir Kampuchea Micro-Life Insurance (PKMI), a subsidiary of French health and life insurance firm Prévoir, began offering life insurance services with a coverage limit of $5,000 to rural customers. This week, Post reporter Hor Kimsay spoke with Solène Favre, CEO of PKMI, about how the nascent Cambodian insurance market is evolving.
Tell me about PKMI’s business.
We distribute very low premium products to low- and middle-income people. At the moment we have 40 staff and we have partnered with five microfinance institutions and one vehicle leasing company to promote PKMI insurance products. We insure more than 9,000 customers with 20,000 policies. Our insurance premiums reached a total of $115,000 at the end of 2013.
From your two-year experience here, how is the future looking for Cambodia’s insurance industry?
Several studies have confirmed that health risks are a crucial factor in the impoverishment of households in Cambodia. We know that around half of the people who are just above the poverty line use savings, sell an asset or go into debt to pay health expenditures when they meet a health problem. Such practices can make them fall below the poverty line. Thus, there is an emergency to cover these low-income earners and their families, with health and life micro-insurance. Developing health and life insurance to reduce the impact of health problems on households is therefore vital to preventing poverty.
How do your products work?
For example, credit-life insurance products can cover someone’s loan repayments in the event of death or disability. Health insurance will cover the insured in case of illness or injury. Before hospitalisation, the insured calls the hotline to be guided by PKMI staff. At one of the 75 partner health facilities, the insured received qualitative medical treatment without paying any advance.
Can people with low incomes afford the service?
Yes, sure they can. While we have variety of products with different prices People can allocate average insurance premium at only $6 per year. This is truly affordable for them. We conduct regular surveys that always confirm this affordability.
Micro-insurance is a new concept for Cambodia. What have been the challenges in establishing a footing here?
The major challenge is making the low income communities aware of micro-insurance. The concept is very difficult for them to understand. For many people, buying a product that covers them if the risk occurs is very difficult to understand because normally they are used to getting something the minute they pay for it.
Another challenge that we face is working health care centres. When we provide health insurance, it is very difficult for people to know where they should go when they have health problems especially people in rural areas because they are used to going to see traditional healers rather than medical health facilities.
This interview has been edited for length and clarity.