Insuring life, health or property has mostly been unattainable for the average Cambodian. With a third of the population living below the national poverty line and 80 per cent abiding in rural areas, money is spent anywhere but long-term investments.
To try and break this status quo, a first micro-life insurance company started operating in July 2012. Prevoir Kampuchea Micro-life insurance (KPMI) offers a traditional insurance service to low- and middle income earners.
“We chose to offer micro insurance here more to help the country and the low- and middle- income people and we believe that through micro insurance we can reduce the vulnerability of those people,” says Solene Favre, CEO of KPMI. “Our social mission is very strong and that is something different from regular insurance companies.”
PKMI is a subsidiary of Groupe Prevoir, an independent, privately owned French life and health Insurance group created in 1910. The family owned group started to go abroad in 1996, entering the markets in Portugal, Poland, Vietnam and Brazil.
Prevoir opened PKMI in Cambodia in 2011 and in June 2012, its products were validated by the Ministry of Economics and Finance, making PKMI the first licensed micro-life insurance in Cambodia. The 18 members are all experienced in micro insurance after working for GRET, a French NGO that developed the micro health insurance project SKY.
According to Savre, PKMI’s target customers are divided in three groups – the clients of micro finance institutions, the corporate clients such as NGOs or restaurants that insure their employees and the individual.
PKMI offers health and life insurance to their clients. “We have standard products,” Savre says. “But if for example a company wants something specific we can design that in house, we are very flexible. On the requirement of the customer we design the product and then decide on prize or the premium of our insurance product.”
Savre says PKMI’s unique advantage is the “cashless” system. It means clients can access selected healthcare facilities in Phnom Penh and the countryside for free. PKMI first checks a facility’s service and their quality and then contracts with them so that clients do not have to pay immediately when requiring treatment.
In case of an accident, clients have to call PKMI’s toll-free hotline and then choose between two options. They can either access a contracted health facility without paying anything, as PKMI directly pays these health facilities. In case these are out of reach, they can access non-contracted facilities where they have to pay in advance but will be reimbursed by PKMI within two or three days.
Chou Ngeth, general manager of PKMI, says the “cashless” idea is a big benefit for low income earners. “People are shocked when they need to spend money immediately. They cannot afford to pay that immediately,” he says. “Normally they need to borrow money from money lenders or sell their lifestock and they make a big loss. But if they have insurance, they are covered by cashless and they don’t need to worry. They can go to hospitals and get treatment.”
“This is a clear matching between what they need and our product offer.”
Prevoir only focuses on health and life insurance. “It’s not the same thing to cover people and to cover goods,” Savre says. “We concentrate on people, that’s where we have our expertise.”
Savre says PKMI’s insurance services are accessible for everyone but to be affordable to a large number of people, especially within the low income level and the rural areas, “our premium needs to be low.” And because the premium is lower than for regular insurance, they need a large number of clients to be profitable.
According to Chou, the premium for life depends on aspects such as occupation, age group or gender, but it normally ranges between 0.5 per cent to 1 per cent per year. “For example if people want to insure 100 dollars, they pay 0.5 dollar to cover 100 dollars per year,” he says.
PKMI partners with micro finance institutions to get customers. “They already have clients in hand, they already know the needs of their clients,” Chou says.
In the near future, PKMI does not expect there will be a large number of micro insurers in Cambodia but hopes their business will become stable in the country. “If we don’t provide micro insurance, the poor don’t have insurance,” Chou says. “They are already at a vulnerable condition and compete with the middle and high income people that can access all financial services, insurances, and banks.”
According to Savre, micro insurance is especially important to not make people fall down the poverty line. “Fifty per cent of those facing big, sudden health expenditure and living just above the poverty line would fall down the poverty line because of that expenditure,” she says.
To contact the reporter on this story: Anne Renzenbrink at [email protected]