Cambodia's Ministry of Finance and the International Finance Corporation are preparing
for a micro-insurance industry that could sell funeral insurance and other types
of health and property insurance to the poor.
"Depending on the kind of insurance, the monthly premium might be 50 cents,
and the payout $1,000," said Margarete Biallas, an IFC manager who held a workshop
November 20 for about 70 people from micro-finance NGOS and banks, and insurance
companies that might participate.
Biallas said as the first step Cambodia needs a sub-decree to the existing Insurance
Law to provide for regulation of micro-insurance.
IFC is working with the World Bank and the Minister of Finance Keat Chhon to draft
the regulations. Biallas said the minister hopes the sub-decree can be approved by
the Council of Ministers by January.
"The capital market is what's driving this," said Biallas.
She said because insurance companies are normally required by regulators to invest
a percentage of their premiums in varying types of risk investments, the low-risk
government bonds that will eventually trade on Cambodia's capital market will be
a likely place for the insurance companies to invest.
Cambodia is working with the South Korean Exchange to develop a capital market to
begin operations in late 2009. The officials working on the exchange haven't yet
said what companies will trade, but they said insurance companies, profitable banks
and companies with stable revenue flows, such as public utilities, are desired.
Biallas said that Cambodia's thriving micro-finance industry is interested in getting
into micro-insurance as agents. On the underwriting side, she said that IFC has contacts
with international insurance companies that will underwrite some types of micro-insurance
"These insurances very much depend on the country's culture," said World
Bank financial sector specialist Serap Oguz Gonulal. She noted that in some cultures,
such as in South Africa, a poor family can be bankrupted by losing a working family
member and having pay for a funeral at the same time.
Other countries with successful micro-insurance industries are Bangladesh, India
and the Philippines. Some of the leading types of micro-insurance are funeral insurance,
crop insurance and health insurance.
The officials also said crop insurance is widely needed in Cambodia, but underwriters
don't want to underwrite crop insurance without a better historical record of flood
years. The records were lost or destroyed in the Khmer Rouge era. The officials said
they are looking at ways to fix the data problem.