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Logo of Phnom Penh Post newspaper Phnom Penh Post - Insurance business set for expansion

Insurance business set for expansion

JUST north of the site of a recent fire and a few blocks from the city's chaotic

boulevards stands the hub of Cambodia's nascent insurance industry: the No Problem

Insurance Park.

Given the country's accident-prone environment and dearth of insurance regulation,

No Problem Insurance may seem an oxymoron, but insurance entrepreneur Philippe Lenain

believes the Cambodian market is full of promise.

"This is an extremely young market, like Thailand 25 to 30 years ago. It's a

market of high economic growth," said Lenain, director of Indochine Insurance

Union Ltd. His firm is headquartered in a restored colonial villa in the No Problem

Park, a name he optimistically retained from the former business there, No Problem


Most insurance analysts agree Cambodia is set for a surge in the largely untapped

local insurance market.

Despite the lack of regulation now, a draft insurance law is awaiting a vote in the

National Assembly.

The law, predicted to pass in 1997, will require automobile third party liability

as well as insurance for the booming construction sector.

Analysts point to a small but growing class of about 50,000 car owners - with only

a handful now insured - as the biggest source of potential growth.

Moreover, they note, there are few competitors.

The state insurance company, Caminco, was created in 1992 after nearly two war-torn

decades without an insurance market.

Caminco oversees the industry in the absence of a national regulatory body, which

will not be set up until the insurance law passes.

It also sells policies, though it has focused almost exclusively on marine cargo

insurance, which is compulsory in Cambodia, said Rath Sa Rath, Caminco reinsurance


In addition, there are four private firms in Phnom Penh who act as agents for Caminco,

he said.

Indochine, which started in 1993 and holds a near-monopoly on the market, has recently

been joined by three new players: Thailand-based World Trade, Singapore-based Forte

and Asia Insurance, which is owned by investors from several Asian countries, he


After the insurance law passes, the four agents will be able to operate as full private

companies, said Rath Sa Rath, but he said the government was cautious about licensing

more firms.

"We have a lot of applications, from more than ten companies, but the government

hasn't allowed those because the market is still small," he told Reuters.

Analysts estimate that about 70 percent of the policies sold by the four agents were

automobile policies, a percentage they said was typical of a young market.

The remaining policies are for motorcycles, construction, worker compensation, health

and fire, said Lenain.

Analysts said almost all policies are held in the capital by foreigners or Cambodians

who are subject to the insurance requirements of foreigners because of business relationships.

Most Cambodians' lack of familiarity with insurance is a barrier to policies, but

that it was having to prepare television commercials explaining the basics of auto


Insurers tell stories of car owners bargaining for higher claims as if at a market

stall, and many accident victims insist, with threats, on immediate compensation

at the scene of a wreck.

There are other problems. Underwriters comfortable with Cambodia were hard to find

until recently, and for Cambodians, whose average per capita gross domestic product

is under $300, premiums are expensive. Auto premiums in Phnom Penh - notorious for

theft and traffic accidents - range as high as those in Paris and US suburbs, said


"It's a bit expensive. But if people can buy expensive cars they will be able

to pay to insure them," said Rath Sa Rath.



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