Two new life insurance companies will launch operations in Cambodia by the end of this week, aiming to grab hold of a market that has seen rapid expansion in recent years while also creating stronger competition in the emerging industry.

Bangkok Life Assurance (Cambodia) Plc launched operations on Tuesday with Hong Kong-based pan-Asian insurer AIA scheduled to debut on Friday. They join a market already populated by four other life insurance providers.

Life insurance is a relatively new product in Cambodia, first entering the market 2012, though the industry has grown impressively with a 95 percent increase in gross premiums reported in 2016 alone. However, the customer base remains small with only 51,000 new policies for the same year, according to the recent annual report by the Insurance Association of Cambodia (IAC).

The gross premium value was measured at $43 million for 2016 with a recorded total sum assured reaching over $1 billion.

Speaking at the official launch of Bangkok Life Assurance (Cambodia) on Tuesday, Nguon Sokha, secretary of state for the Ministry of Economy and Finance, said that life insurance gross premiums accounted for 31 percent of the $120 million in gross premiums recorded last year.

“The growth of the life insurance sector reflects the increasing trust of Cambodians for new financial products,” she said.

Ngeth Chou, senior consultant at Emerging Markets Consulting, said that there is plenty of room for growth in the life insurance sector when compared to Cambodia’s more developed neighbours.

He added that insurers operate with long-term strategic planning and often wait for years before turning a profit, but the new players show that investors have confidence in the local growth potential.

“While the number of players is a bit overcrowded at moment, there is still potential for longer term growth providing that the number of insurance policies continues to increase,” he said. “However, in the short term, the companies will fight [to gain a market share] due to Cambodia’s small population and low awareness of financial products.”

He added that the six established players should work to educate the population about life insurance products before the government considers granting more licences.

Methit Mukdasiri, director of Bangkok Life Assurance (Cambodia), said that Cambodia was the first country where the company had expanded to outside of Thailand and that the Kingdom’s youthful demographics boded well for a promising insurance venture.

“The market is still growing and it is not too late to enter because it is still very young,” he said. “Life insurance is a long-term business. It is like running a marathon and we need to have a good plan and strategy to grow.”

Robert Elliott, CEO and general manager of Manulife Cambodia, said that life insurance market penetration in Cambodia remained very low, at approximately 0.2 percent of GDP, compared to the rest of Asean with a market penetration of up to 4 percent.

“As more life insurance companies come in, I believe they will bring more innovations and variety of products and services into the market,” he said. “The industry will be bigger and therefore more Cambodian people will be covered by life insurance.”