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Business Insider: Selling life insurance in an untapped market

Prudential CEO David Nutman photographed at his office last week in Phnom Penh.
Prudential CEO David Nutman photographed at his office last week in Phnom Penh. Hong Menea

Business Insider: Selling life insurance in an untapped market

Prudential Life Assurance first entered the Cambodian market in 2013 at a time when few in the country understood the value of life insurance products in long-term financial planning. A partnership with Acleda Bank, the largest bank in the Kingdom, has helped Prudential grow steadily and extend its reach across the Kingdom. The Post’s Kali Kotoski sat down with David Nutman, CEO of Prudential Cambodia, who took over the reins in November.

How has Prudential expanded since it first entered the market?
Currently, we operate in more than 100 Acleda branches, so we are in key cities, provinces and districts. In 2014, we started setting up direct agency operations that have been growing as well. In the last few months we have opened offices in Battambang and Siem Reap. That brings our total direct agency operations to three and we hope in time that we will have more offices as we expand.

In terms of growth, in June of this year we hit 100,000 policy holders. Achieving that in around four years is something we are very pleased with.

What is the vision you have for Prudential in Cambodia?
Well, Cambodia has a population of 15 million. And from a life insurance perspective the country remains underpenetrated. A lot less people have life insurance here than in pretty much any other Asean country. As far as we are concerned the market is still untapped, meaning that the opportunity for growth is positive. Prudential is very much focused on Asia as the region has been at the forefront of growth.

How do you view the competition in the life insurance market as more players enter Cambodia?
Cambodia is an important growth market and is in the sweet spot of our Asean portfolio. Unsurprisingly, others look at the market in the same light.

Frankly, Prudential welcomes competition in this market because it needs to grow. With more players there should be a faster development of the financial sector, which is a positive thing.

With life insurance being a long-term business, when do you plan to turn a profit?
Profits will come in their own time. For us it is about executing our strategy and making sure we reinvest our earnings into expanding our products. Insurance is a long-term business, so the profit cycle is very different. We started rather strong in Cambodia, but we are still in the beginning of our profit cycle.

Where do you see the earnings from Cambodia potentially being invested?
We are keen to help evolve investment opportunities in Cambodia. We will be a ready buyer of assets when they come along. But the first step is to create an environment where those assets can thrive. So bonds are something the government has shown interest in developing, and we will work to see that platform get built. If the bond market develops how it has in Vietnam and Thailand, then that will be a potential asset.

How does the partnership with Acleda work?
Simply put, we have a referral partnership where Acleda funnels customers to us. It helps that Acleda is well respected with good links in the community as well as having foreign shareholders. Together we are stronger to offer their customers more financial service solutions.

If Cambodia were to set up regulation for bancassurance, allowing banks to sell your products, how would that help spur growth?
Well, there are many different bancassurance models. A model can work in one place and not work in another. And even across Asia we have seen very different models. So, what Cambodia needs is a model that is right for the economic standing of the country.

This market is underpenetrated and in order to take life insurance to the masses it needs more distribution channels. Luckily, Prudential works in many different countries at different stages of development so we have learned to grow and adapt to local regulations even if they change. But distribution is still the most important part of the business.

This interview has been edited for length and clarity.

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