Brokers are a relatively new player in Cambodia’s insurance market. Their appearance reflects changing dynamics in the insurance sector and points to a market that is maturing and gaining in complexity.
There are currently seven insurance brokers operating in the Kingdom. MGA Australia, one of Australia’s biggest brokerage firms, established a subsidiary in Cambodia in August 2014, MGA Asia, to meet the Kingdom’s expanding insurance needs. We talk to Meas Sophat, the firm’s Executive Chairman, to learn more about the insurance brokerage market in Cambodia.
B2B: Why did MGA choose Cambodia to establish its first branch office in Southeast Asia?
Sophat: MGA intended to invest in Southeast Asia for many years, but we decided to start our operations in an emerging market first. We decided to go with Cambodia first because it is one of the few emerging markets that is open to brokers, but we are now also looking into Laos and Myanmar. Hopefully, within the next few years, we will be able to start our operations in these two other emerging markets. Eventually, we intend to establish operations in the rest of Southeast Asia.
B2B: Why are insurance brokerage firms necessary in the Kingdom?
Sophat: The insurance market in Cambodia is still immature, and not long ago there was only a direct market between the insurers and the consumers. There were no professional intermediaries in the market, no brokers. However, the distribution channels have changed now as more and more brokers obtained their licenses from the regulator, the Ministry of Economy and Finance, and as the industry required help from professional brokers to instill more trust and awareness. This is in line with other, more mature markets in which insurance brokers play a significant role in instilling confidence into the market.
B2B: What is the benefit of using your services, as opposed to going directly to an insurance company?
Sophat: The main reason is we work for the clients, not for the insurers, and seek to protect their interests through our professional advice and expertise. We provide the client with a range of proposals/quotations from different insurers, compare them and make recommendations based on the best terms and conditions, including pricing, for the client. We ensure the client gets the best contract arrangement, and manage the claims on their behalf at no cost.
B2B: How does your company deal with service fees?
Sophat: We do not charge fees to our clients. By law, we charge fees to insurance companies as stipulated in our agreements with them. We can deduct our fees when we arrange the payment to them and have an advanced system to manage these transactions.
B2B: What sectors of economic activity in the country are teeming the most with opportunity for insurance brokers?
Sophat: Opportunities for insurance brokers are dependent on the country’s economic growth. However, as insurance brokers focus more on commercial lines, manufacturing and construction are the industries that present the most interesting opportunities for brokers.