Premium revenues are likely to drop 10pc on 2008 as construction slows and garment exports plummet, industry body says, but top official rejects numbers and says sector had ‘stable’ year.
Amajor garment factory fire and a slump in building activity led to a bad year for Cambodia’s fledgling insurance sector, industry figures say.
Premium revenues in the first 10 months of the year decreased 11.5 percent to US$14.16 million compared with the same period in 2008, according to General Insurance Association of Cambodia figures, as claims paid out amounted to $11 million, more than three times the $3 million in compensation paid a year earlier.
Of that, $9 million was paid in one claim by Forte Insurance to Suntex Pte Ltd in compensation for a fire that destroyed its garment factory in Dangkor district in April.
We have not seen any impact on the insurance industry; it’s stable.
Insurance association Chairman Chhay Rattanak said the decline, which follows years of double-digit growth, was due largely to a slump in construction projects. Premium revenues from the sector fell 70 percent as a large number of developers suspended projects or pulled out, he said.
Falling premium revenues from the garment sector – which saw exports fall more than 20 percent this year – also contributed, while storm damage to hotels in Siem Reap in the wake of Typhoon Ketsana resulted in a sharp increase in payouts.
Chhay Rattanak said he expected full-year premium revenue to be down 10 percent from last year, but anticipated a slow rebound next year.
Ministry of Economy and Finance figures show premium revenues grew 18 percent year on year in 2008 to $20.5 million.
Mey Vann, director of the Finance Ministry’s Department of Industrial Finance, disputed the figures from the industry association, saying revenues were on track to match last year’s, though official figures were not yet available.
“We have not seen any impact on the insurance industry; it’s stable,” he said. “And I do not see any major risk for the industry, except for one huge claim at Forte, so it is only bad for Forte this year.”
Forte Insurance Director Youk Chamroeunrith said revenues had stayed stable in 2009 after growing 20 percent annually in recent years, but declined to give figures. An increase in demand from banks and telecommunications companies had offset losses in premium income from the construction and garment sectors, he said.
It was not a bad year for all insurers. Agnes Chan Weng Yee, general manger at Campubank Lonpac Insurance, said her company’s premium income grew 40 percent this year to $3.5 million, and she expects to see a similar gain next year as the economy begins to recover.
“We are doing very well this year. Premiums grew about 40 percent, mostly in property insurance and project risk,” she said, adding that claims had increased just 5 percent. “We forecast that premiums in the insurance industry will bounce back next year, and we would expect the same growth as this year.”
Infinity Insurance Chief Executive Officer David Carter said premium revenues had increased around 20 percent this year due to new business growth and the retention of existing customers.
“We have secured more corporate customers this year, which reflects increased consumer confidence in our ability to insure and manage more complex risks,” he said.
The sector is likely to grow 10 percent next year, he added.
Cambodia today has six insurance companies: Forte Insurance, CAMINCO, Asia Insurance, Campubank Lonpac, Infinity Insurance and new arrival Cambodia-Vietnam Insurance. It also has one domestic reinsurance company.