Although private insurers hope to capitalise on Cambodia’s untapped rural insurance market, some insiders say the industry lacks regulation and may outprice the Kingdom’s poor.

Fewer than three per cent of rural Cambodians have insurance, Ministry of Economy and Finance data shows.

Micro-insurers, who offer low yearly premiums to rural residents, say the gap in market penetration would attract investment.

“We see a lot of potential for micro-insurance in rural areas. It’s an untapped market,” Ngeth Chou, a representative of Kampuchea Micro Life Insurance, said yesterday at a United Nations Development Program workshop on micro-finance.

“If we have one million clients and collect 12 or 15 per cent, it is good. It is a big market.”

Kampuchea Micro Life Insurance, which will partner with a local micro-financer, hoped to launch next month, Ngeth Chou said, although he declined to give a figure for the company’s yearly premium.

There was more to micro-insurance than business interest, the UNDP said. The practice provided relief for low-income households by increasing their capacity to cope with sudden hardship caused by death, illness or sudden loss of property, it said.

“Micro-insurance decides whether children stay in school,” Mayur Ankolekar, a representative with the United Nations Capital Development Fund, said. He added that crises in rural families often resulted in children being pulled from school.

Until recently, micro-insurance projects had operated as disparate “pilot” programs, Bou Chanphirou, deputy director of the Ministry of Economy and Finance’s Financial Industry Department, told the workshop.

The industry lacked the regulatory framework and quarterly reports needed to assess the fiscal viability of insurance decisions, and had only begun issuing licences to micro-insurers in June, Bou Chanphirou said.

“I am not sure the private sector can sell to rural people,” said Dann Chhing, a project manager at non-profit Community Based Health Insurance, which is overseen by Cambodia’s Department of Health.

Built-in operational costs in private businesses would be passed on to consumers, ultimately resulting in higher premiums, Dann Chhing said.

He said government efforts to insure Cambodia’s rural population focused too much on private insurers.

Dann Chhing said his program offered yearly premiums at US$2.50.

Although the government issued licences, permanent regulation was still void pending the approval of a law on insurance, Bou Chanpirou said.