Benefits and Growth of Bancassurance in Cambodia

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AmCham organised an event “The Role of Bancassurance in Cambodia and the Region” at Raffles Hotel in Phnom Penh in March 2023, and the high-level speakers from The Kingdom and overseas were able to share insights on the importance and value of its growth.

What is Bancassurance?

In a nutshell, bancassurance is “an arrangement between a bank and an insurance company, through which the insurer can sell its products to the bank’s customers.”

The National Bank of Cambodia (NBC) and the Insurance Regulator of Cambodia (IRC) have been working together to strengthen bancassurance in Cambodia.

Many Cambodian banks and insurance companies have partnered on the services according to the Prakas on conditions for the bancassurance business of banks and financial institutions issued in 2019. The Prakas itself defines Bancassurance as “a mechanism by which the institution and insurers collaborate to distribute and market insurance products through the institution’s network.”

On March 31, 2021, NBC issued a circular on bancassurance to define the regulatory framework for those banks and insurance companies already engaging in the practice, and the IRC has prioritised bancassurance in its 2021-2030 insurance sector development strategic plan.

How does Bancassurance benefit Cambodia?

At the event on March 22, 2023, Chris McCarthy (AmCham Vice-President) said that bancassurance is transforming the landscape of insurance and making it accessible to all. He also said that it is bringing together two titans of the finance world – the banking sector and the insurance sector.

AmCham says that banks’ products and propositions are strengthened with health and financial protection offerings.

The global bancassurance market is projected to grow by a CAGR of more than 6% from 2022 to 2028, with much of that growth focused on developing markets in Asia-Pacific, including Cambodia.

Bancassurance is driving the growth of the Cambodian insurance market, accounting for 40% of total sales in 2022, according to Insurance Regulator of Cambodia (IRC) director general Bou Chanphirou.

  • By the end of 2022, there were 40 insurers operating in Cambodia with total assets of approximately USD $1 billion and an equity fund of more than $400 million.
  • The growth in 2022 was a 10.6% rise compared to 2021, which recorded $299.8 million in gross insurance premiums.
  • Cambodia’s insurance market has grown at an average annual rate of 25% over the last 10 years.
  • The insurance penetration rate in Cambodia is 1.17%, with a density of $20.47 per capita – this is low compared to other countries in the region, which means it has attractive growth potential.

HE Rath Sovannorak (Assistant to Governor and Director General of Banking Supervision NBC) in his keynote address added that the national financial inclusion strategy “sets out the policy to outline the goal of improving financial inclusion” which includes aims such as reducing by half (from 27 % to 13%) women’s financial exclusion.

Bancassurance Cambodia
HE Bou Chanphirou (Director General Insurance Regulator of Cambodia)

In a second keynote address, HE Bou Chanphirou (Director General Insurance Regulator of Cambodia) added “Bancassurance could not be smoothly introduced here without strong commitment, collaboration, and cooperation of two regulators, banking and insurance.”

He added that the IRC is co-developing a code of conduct for insurance agents with various insurance institutions which will be adopted soon.

The guests were presented with information on the sector as well as the benefits of bancassurance in Cambodia on topics such as ‘How bancassurance can keep pace with retail banking in Asia” by McKinsey & Company from Hong Kong.

One of the main takeaways was that insurance can serve the extra need in banking for their customers as a means to develop a positive relationship with them.

Leading members of Cambodian banks and the insurance sector also engaged in a panel discussion on the role of bancassurance in Cambodia.

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