Property insurance increases 29 per cent

Property insurance increases 29 per cent

120524_03

Acleda bank. Photograph: Vireak Mai/Phnom Penh Post

The amount of property insurance taken out during the first quarter of this year saw an increase of 29 per cent compared to the same period last year, while the demand for bank loans to buy houses or develop property increased significantly, according to the assistant to the General Director of the Cambodia Insurance Association earlier this week.

Ty Atith said that the premium paid by the customers for property insurance nationwide during the first quarter this year was $2.5 million, up 29 per cent, compared to the same period of 2011, when the premiums came to $2 million.

He added that the increase is mainly due to the many incidences of factory and house fires during recent years, and particularly due to the increased number of construction projects in Cambodia, where the insurance premiums also increased.

He said that the requirement for this insurance is beneficial for protection against disasters such as fire and other natural disasters, like floods or lightning. He added, “When the property sector grows, the insurance also grows, but if the property decreases, the insurance sector will be affected.”

Mr Yuok Chamroeunrit, CEO of Forte Insaurance (Cambodia) Plc, said that currently the insurance for houses has increased a little, while there are not many people borrowing money from banks to buy houses. But if the borrowers increase, it also increases accordingly.

Meanwhile, he added that the insurance for the first quarter this year increased 35 per cent, compared with the same period last year. The coverage includes high-rises, housing, factories, hotels, and gas stations. But the insurance for houses seems not to have risen, while there is not much borrowing of money from banks to buy houses.

Chamroeunrith noted, “Based on my observations, in Cambodia, not many people voluntarily acquire property insurance, they buy it only when they borrow money from a bank that requires them to buy insurance.” He added that during the last few years, property in Cambodia has been strongly affected by fire and natural disaster.

He added, “If the property market continues to increase, then insurance will increase.”

Ms. So Phoneary, the deputy director of ACLEDA Bank, said that the bank doesn’t require all house buying borrowers to purchase insurance, only those seen as high risk, and the bank can lend only 75 per cent of the total price of the property. She added, “We require customers with machinery warehouses, factories, hotel or high risk houses to buy insurance policies.”

She continued, “We want all our customers to have insurance to protect against risk to their property. When the housing loans increase, insurance also increases.”

It should be noted that the house loan borrowers of ACLEDA Bank for the first quarter of this year number 3,591, with total loans of more than $88 million, an increase of 33 per cent compared with the same period of 2011 when house loans amounted to only $70 million.

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