Insurance Regulator of Cambodia (IRC) director-general Bou Chanphirou on January 12 urged banks, other financial institutions and insurance companies to cooperate in bancassurance to drive further growth in the insurance sector, and raise penetration and density.
Chanphirou made the remarks at the signing ceremony of a bancassurance deal between AIA (Cambodia) Life Insurance Plc and Prince Bank Plc.
He said the Cambodian insurance market was still growing rapidly despite Covid, at an average annual rate of about 25 per cent, slowing down to eight per cent in 2020 to reach $270 million, and expected to have accelerated last year to $300 million.
The IRC recently launched a 2021-2030 insurance sector development strategic plan, setting out a roadmap for the agency in the short-, medium- and long-term, he said.
The framework of the short-term 2021-2023 strategy defines an insurance distribution system with a particular focus on the promotion of product sales through banking and financial institutions, in arrangements known as bancassurance. These are typically divided into two approaches: the referral and direct sales models, he explained.
AIA and Prince Bank “have partnered to more widely promote the sale of insurance products in this potentially lucrative market in Cambodia”, Chanphirou said.
Speaking at the event, Rath Sovannarak, director-general of the National Bank of Cambodia’s (NBC) Banking Supervision Department, noted that the insurance sector is taken into account in broader financial industry promotion efforts in line with Financial Sector Development Strategy 2016-2025 and National Financial Inclusion Strategy 2019-2025.
On March 30, the NBC issued a circular on bancassurance to define the regulatory framework for banking and financial institutions involved in the practice, so as to bolster financial inclusion in the Kingdom.
Sovannarak said: “Bancassurance will benefit all stakeholders, with banking and financial institutions able to build more relationships with customers, diversify their products and services, expand their sources of funds and gain extra profit to finance operations.
“Customers in turn can cut costs for financial solutions and get better, quality services at reasonable prices,” he said.
The IRC’s Chanphirou said there are 40 insurers in Cambodia, and 27 banks conducting bancassurance.
Insurance penetration has reached 1.04 per cent and density – the amount of average general liability insurance premium per capita – stands at $17.26, “which indicates that the Cambodian insurance market still has great potential for future development down the line”, he said.
It was this potential that prompted the government to establish the IRC on January 16, he added.