How important is insurance, exactly? Why are there so many types of insurance?

Wait, what is insurance?

These questions are common in Cambodia, where insurance is still a fairly young market that has yet to reach critical mass among locals. This infant industry is showing encouraging signs of growth, especially in life insurance. According to the latest report from the Insurance Association of Cambodia, gross premiums for life insurance grew to $8.9 million during Q1 of 2016, more than double compared with the same period last year. Post Supplement talks to three prominent insurance companies and four Cambodians to get further insight on the climate of general insurance awareness in the country.

PRUDENTIAL | Pankaj Banerjee, CEO

“Life insurance is still a relatively new category in Cambodia and we have invested a lot of time and effort, along with the continued assistance and direction from the Ministry of Economy and Finance, to educate people about the benefits of life insurance as a long-term financial planning solution that offers the advantage of safeguarding a policyholder’s family in the event of an unfortunate incident befalling them.

As people become more aware of and interested in life insurance, they are beginning to look for more relevant products tailored to their long-term financial plans and goals.

Our team here at Prudential Cambodia is working diligently to ensure that we continue to offer customer-centric products and services – including products specifically geared towards saving for children’s education and simplified products for a broader cross-section of the population.”

FORTE INSURANCE | Charles Cheo, CEO

“We have insured almost 150,000 people. This big number is because we offer our service from mega-risk to micro-risk – low to medium income people in the countryside nationwide. Our most popular insurance policies are the car insurance policy, personal accident insurance, and medical insurance. Forte has received tremendous support and trust from corporate companies. Both local and international corporate companies account for 70 per cent of our company’s premium revenue.

Many Cambodians still see insurance as an expense with little benefits, and the biggest hindrance is the education about how important insurance is for their lives, families and financial wellbeing. There has been an increase in general insurance awareness now, and we expect this momentum to grow even faster so that more and more people will understand the importance of insurance.

Forte market our products to clients through our paid employees, brokers, and partners.”

MANULIFE | Robert Elliott, CEO

“Currently, Manulife protects more than 22,000 lives in Cambodia, with over $400 million of total sum assured. Our savings and education plans are the most popular. We also have other policies; each product and solution is carefully designed to meet the different needs and circumstances of each

Our key market in Cambodia is the emerging middle class in Cambodia.

We launched our Manulife Group Protector last year and currently protect over 8,000 employees from 40 local and international companies in Cambodia. Manulife is the first MNC in the country to offer this group protection solution, which protects employees and their families by providing life insurance benefits to the family of an employee upon unexpected death or total disability due to unfortunate causes.

The life insurance industry in Cambodia, although very new since taking off in 2012, has witnessed rapid growth over the last four years. Most Cambodians are becoming increasingly aware of life insurance and the positive benefits it brings to them. During our four years of operations in Cambodia, Manulife has held a number of education seminars to help educate Cambodian families about the industry and its advantages.”

Cambodians speak to Post Supplement about their personal take on insurance, how insurance has helped or would help them, and why they think there are alternative methods that are better suited to the majority of locals who are unable to afford premiums of any insurance policy.

Tith Chan Dara, Professor of Media & Communications at the Royal University of Phnom Penh

My house in my hometown caught fire back in mid-May.

In Cambodia’s culture, the older generation doesn’t pay much attention to insurance because it’s a new product. They also do not trust insurance 100 per cent.

If they cannot afford anything at all, they rely on their family, friends or those around them for help. For example, in my case, whenever I or my friends have any problems, we have people around us who support us however they can.

This is not exactly insurance because it’s not guaranteed that there’ll be someone to help us when there’s a problem.

Insurance is a new concept in Cambodia, it has only entered the market in recent years and people are not too open to it. Only those who can afford it will consider whether or not they should try it out. Personally, I don’t have high confidence in insurance but after the fire, I thought about it and bought life insurance. At least I know that if I meet with an accident, the money can go to my family.

I consider this a long-term investment, although I am only trying it out. Someday, I will get my money back plus interest, so I’m not losing any money. All I have to worry about is the premium to be paid every month, every year.

Um Vuthdara, Professor of Economy at Pannasastra University of Cambodia

Most Cambodian people don’t buy insurance because it’s expensive, and they don’t understand it. They don’t understand how insurance can help them. They don’t understand the benefits of insurance. First, they lack information. Second, they don’t seek the information. And third, they don’t understand the definition and importance of having insurance.

When they fall ill, from what I’ve seen, they borrow money from people that live nearby. Also, they would pawn their land title and use that money for treatment. If not, if they have any valuables, they will pawn those. Or they will borrow money from their relatives to solve the crisis, and then they have to pay them back.

Insurance is a solution by spending money today and reaping benefits in the future. But for Cambodians, their income is very limited. From where do they get money to save up for tomorrow? Most of them spend their money for today. Almost 90 per cent of Cambodians are farmers.

It’s also hard to find a job. Cambodians can buy insurance only when their income is high enough.

Sok Somphoas Phallyka, Employee at a NGO

I don’t have insurance. I feel like insurance doesn’t cover everything.

There are exceptional cases. For instance, life insurance; there are cases that aren’t covered such as suicide. How do we know how we are going to die? Let’s say we have been paying lots of money, but when we die, the insurance doesn’t cover our death. Illnesses are the same way. There are some that aren’t covered. Wouldn’t we have spent money for nothing?

That’s why I think having savings – for people who can – is better. If we can make proper commitment and manage properly, we can take out the money when we get ill or get into an accident. It’s nothing serious, and the money is still ours. Basically, we don’t have to worry about whether or not we can claim money from the insurance.

If we put savings into the bank, even if our house catches fire, there is still money in the bank that we can use. It’s all about managing the income. I’m not saying that insurance isn’t good. It’s just that I personally feel uneasy. When there’s an accident, I don’t know whether or not it’ll be covered, what the process will be, or how long the wait is.

Re Chen, Bookstore Owner

I have had insurance with Prudential for three years.

Cambodians aren’t insured, firstly, because of the lack of information. Also, many Cambodians are employed by companies without any insurance, many of them have a measly income and can’t afford the insurance premiums by themselves.

About ten years ago in Cambodia, banks were still going bankrupt, but I doubt anything like that will happen again in the country. Same goes for insurance companies. We have to know where the company’s branches are, and who they’ve partnered with. Prudential is partnered with Acleda Bank.

The insurance I’ve bought is for 15 years. I have 12 years left to pay. If I’ll make it to the next 12 years, my insurance contract will expire and I will have paid the full amount. I will be able to cash out the money if I’m still alive then. But if I die, the insurance company will compensate my family. I’d like to believe that this is my savings.

Although it’s similar to savings, in terms of the amount of money, it’s far less. It’s not as much as a fixed account at the bank. Insurance companies give us less money, but the compensation is high. This is a precaution.