Logo of Phnom Penh Post newspaper Phnom Penh Post - Garment fire claim in millions

Garment fire claim in millions

Garment fire claim in millions

110526_7b
Smoke billows from the June Textiles factory during the March fire. A large insurance claim has been made. Photo by: Pha Lina

THE fire at June Textile Factory will result in a claim of about US$16 million for a domestic insurance firm, according to General Insurance Association of Cambodia Chairman Chhay Rattanak.

The garment factory in Phnom Penh’s Sen Sok district had employed some 4,000 workers, until it caught fire on March 31.

The claim would be based on the company’s assessment of its loses, but according to a preliminary estimate, it would be between $15 million and $16 million, said Chhay Rattanak.

“The amount will not be a burden on the local company, as they have reinsured with a foreign partner,” he said. Chhay Rattank declined to name the Cambodian insurance firm yesterday.

“Our [GIAC] regulations do not allow a local insurance company to handle this large an amount themselves, as they don’t have enough ability to pay a big claim such as this – this is defined by the law to keep the industry growing,” he said.

Ministry of Economy and Finance Industry Division Head In Meatra said yesterday Cambodia’s laws require a local company reinsure in certain cases with a partner abroad, to avoid risk and keep the industry growing.

“A company in any country in the world cannot handle risk entirely on its own, requiring them to reinsure,” he said.

It is thought June Textiles was insured by Campubank Lonpac Insurance Plc, but officials from the insurance company declined to comment yesterday.

June Textile Director Albert Teoh declined to discuss the name of the insurance company, or the amount of loses yesterday.

“We cannot quantify,” he said. “There are a lot of losses. It should take months to complete the assessment.”

It will also take many months before the factory can resume operations, he added.

Forte Insurance General Manager Youk Chamreounrith said it was common practice in the domestic insurance industry to reinsure with reputable foreign partners to spread risk.

“We don’t want to keep the risk on our own, so we spread it to reinsurers, and they spread risk to their partners as well, complying with international best practices,” he said.

Chhay Rattanak said claims across the industry would increase this year compared to 2010, especially from property insurance.

However, he said he was optimistic about the overall growth of the industry in Cambodia, saying increased claims were not expected to cause severe impact.

“We expect to keep growing at 20 percent each year – the MEF is careful, and strictly control [the industry],” he said.

GIAC statistics show premium revenue increase by 24 percent year-on-year in 2010 to $24.9 million.

MOST VIEWED

  • Temi tourism project approved by the CDC

    The $500.4 million Tourism, Ecological, Marine and International (Temi) tourism project has been approved by the Council for the Development of Cambodia (CDC), according to a notice on its Facebook page on Monday. The project is part of Chinese-owned Union City Development Group Co Ltd’s (

  • Rainsy will return at ‘favourable time’

    Opposition figure Sam Rainsy on Saturday suggested he would not return to Cambodia as he had previously promised, saying that like liberators King Father Norodom Sihanouk and Charles de Gaulle, he would only do so at a “favourable time”. “I will go back to Cambodia

  • NagaWorld casino sees net profit of more than $390M last year

    Phnom Penh’s NagaWorld casino posted a 53 per cent net profit increase last year at $390.6 million, a sum which is almost equal to the combined net profit of all Cambodian commercial banks in 2017. NagaWorld’s parent company, NagaCorp Ltd, is listed on the Hong Kong

  • US Embassy urged to stop ‘disrespecting sovereignty’

    The Ministry of Foreign Affairs and International Cooperation called on the US Embassy in Phnom Penh on Saturday to respect the Vienna Convention on Diplomatic Relations after it called former opposition leader Kem Sokha “an innocent man” – a move deemed to be “disrespecting Cambodia’s