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Fire insurance spreads on growing risk awareness

Firefighters attend the scene of a fire late last year in central Phnom Penh.
Firefighters attend the scene of a fire late last year in central Phnom Penh. Vireak Mai

Fire insurance spreads on growing risk awareness

Property and fire insurance premiums surged 35 per cent last year to reach $24.5 million, leading all other segments of the insurance sector in terms of premium growth and accounting for nearly 40 per cent of total premiums, Cambodia’s insurance industry body said yesterday.

Huy Vatharo, chairman and managing director of the Insurance Association of Cambodia (IAC), said growing awareness of property and fire hazards, and an influx of foreign investment, was driving the segment’s strong growth.

“Most of the growth in fire insurance is from companies, factories and institutions, as they understand the risks fire places on their business,” he said.

“Growth in foreign direct investment also pushes the growth of this type of insurance, as investors want to protect their property.”

Local insurers have reported strong growth in property and fire insurance policies, which are used to protect homes, factories, offices, hotels and restaurants.

Forte Insurance said its total property and fire insurance premiums increased 28 per cent in 2015, compared to a year earlier.

Jenny Huynh, the company’s assistant vice president of marketing and communication, said increasing home ownership is driving the growth of this segment as buyers want to protect their investment and many banks require residential units have fire insurance policies before issuing loans.

“More locals understand the risk exposure better, [so they] buy fire insurance, or the property was bought under a bank loan, which means the bank would require fire insurance in place to disburse the housing loan,” she said.

“Most foreigners buying properties would buy insurance automatically as they will usually get bank loans as well.”

Huynh explained that while Cambodian law does not require the purchase of fire insurance for any type of occupied property, the government requires construction property developers to buy contractor’s all risks insurance. Without this policy, developers are not able to obtain a permit to sell their development before completion.

Cambodia’s total premiums for general insurance increased from $53 million in 2014 to $61.6 million in 2015, according to IAC. Medical insurance had the second largest year-on-year growth at 26 per cent, followed by personal accident insurance at 18.8 per cent and vehicle insurance at 14.5 per cent.

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