The total value of home insurance applications increased 27 per cent through 2011, compared to the previous year, according to official data from the General Insurance Association of Cambodia.
The growth in applicants was due to raised awareness of the potential benefits home insurance offers, Ty Atith, assistant to GIAC’s chairman told the Post.
“We have seen a noticeable increase in users of home insurance, which will help stimulate growth in the real estate sector,” he said, adding that there are currently six insurance companies providing the service in the Kingdom.
A total of US$7.8 million was spent on home insurance through 2011, compared to $6.1 million in the previous year, GIAC figures showed.
Forte Insurance, which has been present in Cambodia since 1996, said it had experienced a 26 per cent year-on-year growth in users in 2011, with the current figure hitting 1,495.
“We expect to see further increases in the number of clients through this year, as awareness rises, however, it is difficult for us to estimate by how much,” said General Manager Youk Chamroeunrith.
Although companies started to provide home insurance in 1994, a large percentage of the Cambodian population remains without the service, he added.
“Poor legal systems are leading to a widening gap when compared to the market in Vietnam and Thailand,” Youk Chamroeunrith said, adding that he estimated Cambodia’s total insurance sector to be worth $29 million, while the markets in Vietnam and Thailand are worth $1.8 billion and $3 billion respectively.
Upon application for the service, which usually costs 0.1 per cent of the total value of the property per annum, clients are issued with a home insurance card, which is required by most home loan providers, he said.
First Finance Plc, which specialises in micro housing finance, said that it is imperative for customers who apply for loans to provide a home insurance card.
“We set such a requirement to protect customer’s houses from fires and other disasters, so they don’t lose their properties and we don’t lose our money,” CEO Kevin Lim said.
He added that this demand will result in an increase in Cambodian nationals obtaining house insurance.
First Finance provided a total of 306 home loans worth $3.3 million last year, a 65 per cent increase compared to 2010, according to Kevin Lim.
One of the Kingdom’s main lenders Acleda Bank, which also requires customers to present insurance cards, experienced a 34 per cent year-on-year increase through 2011 in the value of loans provided, however, Vice President In Siphann said that increases in the number of loans does not necessarily reflect a growth in the home insurance market.
“There is still an imbalance between the [home loan and insurance] figures, because customers taking out loans for smaller properties are not always focused on insurance,” he said.
Some homeowners in the Kingdom have welcomed the increases in home insurance opportunities. Chhim Mao Charo, a Phnom Penh-based construction material vendor who recently insured her property, said that the service will benefit many residents in the capital.
“Fires and other disasters often hit houses in Phnom Penh, therefore people should buy home insurance, also the price is reasonable.
While the emerging service is advantageous for the Kingdom’s homeowners, providers should offer transparency and legitimate services to customers, in order to maintain public confidence in the bourgeoning market, she added.