CAMBODIA has struck an agreement to create the Kingdom’s first life insurance firm, a Ministry of Economy and Finance official said yesterday.

The venture will be 51 percent held by the government, with the remainder owned by a group of four private companies, said Ros Phearun, Deputy Director of the ministry’s Finance Industry Department.

“This policy is very important for our country, as it will help to ensure financial security for Cambodians and will help to develop the financial industry,” he said.

The private companies include Indonesian insurer PT Asuransi, Hong Kong-based Asia Insurance, and Thai firms Bangkok Life Insurance and Bangkok Insurance Public, said Ros Phearun.

The deal was reached on Thursday, though no date has been set to create the insurance firm, he added.

Representatives of the four firms could not be reached for comment yesterday.

Observers welcomed the firm’s creation, commenting there was a requirement for the life insurance services it would provide.

“It’s good to see the government issue the licence. Cambodians need life insurance as much as anybody else,” ACLEDA Bank Chief Executive In Channy said yesterday. “When family members who have access to loans die, they sometimes leave the family with outstanding debts. Life insurance will help to alleviate this financial burden.”

There are currently 6 insurance companies and one re-insurance company operating in the Kingdom, according to the most recent data from the General Insurance Association of Cambodia statistics.

A total of US$13.5 million in premium revenue was collected in the first half of this year, a 19 percent year-on –year increase on the $11.43 million recorded in 2010, its statistics show.

Claims also increased during the first six months compared year-on-year, hitting $30.6 million in the period in 2011, from about $4 million in the same period 2010, the data shows. Two large manufacturing factories suffered serious damage from fire in March and April.

Last week, industry insiders said they were seeing large increases in fire insurance in Cambodia driven partly in response to the two fires, as well as proof that the Kingdom’s insurance companies were able to make good on the claims.