After a rollercoaster 2020, the Kingdom’s insurance sector is expected to rebound positively next year backed by better economic growth, with more industry players having quickly adapted to the effects of the Covid-19 pandemic.
The insurance sector’s sizzling growth has been tempered by coronavirus threats since January, like many other sectors in the economy.
“The economic downturn from the outbreak of Covid-19 is expected to have slowed the insurance market in 2020 compared to previous years.
“However, the market will maintain positive growth due to the effective implementation of the government’s measures in combating and controlling the spread of Covid-19,” Insurance Association of Cambodia chairman Huy Vatharo told The Post.
According to the association, the overall insurance market was expected to have grown at 6.5 per cent in 2020, with the general insurance market accounting for 43.6 per cent and life insurance 54.4 per cent, while the micro insurance market’s share is forecast to stand at two per cent.
As of September, the market had garnered total premiums worth $201.7 million, an increase of 8.2 per cent on the same period in 2019.
“Growth is largely driven by the general insurance market, while more nascent sectors, particularly the life insurance segment – which made its debut in the Kingdom in 2012 – are also showing some growth.
“In 2021, with the forecast of economic recovery and an acceleration of the insurance market, the industry will have higher positive growth than this year,” said Vatharo.
Despite the high growth in the insurance market, with average annual growth of 33 per cent in the past five years, the rate of insurance market premiums compared to the size of the economy remained at a measly 0.9 per cent in 2019 – relatively low compared to other countries in the region.
“This indicates that many people and businesses in Cambodia do not have insurance to protect their financial security against various risks,” he said.
The number of insurance operators in Cambodia has increased steadily with major international players beginning to enter the local market, which is seen as a potential growth market, one propelled by better disposable incomes and improved health awareness among the younger generation.
The association had 31 members as of September – 15 in the general insurance category, 11 life insurance players, four micro-insurance companies and one reinsurer.
While general insurance increased by 18.2 per cent and the life insurance segment grew 2.8 per cent, micro insurance fell 21.7 per cent in the third quarter of 2020, the association said.
At the same time, the total assets of all insurers as of the first half of 2020 amounted to some $678 million, of which 63 per cent was injected into the banking system in Cambodia in the form of deposits.
Meanwhile, the global health crisis has forced insurance companies to come up with innovative solutions to the challenges it has posed.
“The impact of Covid-19 pandemic has forced insurers to review their business operations and distribution models based on customer approaches, service management and digital transformation.
“This is because many customers seem reluctant to meet face-to-face with insurance salespeople during the epidemic. This trend may continue long term,” Vatharo said.
The insurance sector has also been active in helping prevent the spread of Covid-19. With the support of the Ministry of Economy and Finance, general and life insurance companies launched the “Covid-19 Health Insurance Consortium” in August to provide coverage for foreign travellers entering Cambodia.