Insurance is important in Cambodia as it is anywhere, whether for your health, vehicle, or personal property. While the industry is small and relatively new to the Kingdom, several reputable Cambodian firms have become leaders in the local insurance industry, while multinational insurance firms have also opened local branches. Cambodia’s general insurance industry earned total premiums of $61.6 million in 2015, up 16.4 percent year-on-year from 2014, according to Huy Vatharo, Chairman of the Insurance Association of Cambodia. Life insurance premiums were worth $22.1 million in 2015, three times larger than the previous year.
Cambodia’s insurance landscape
The first Law on Insurance was not passed until 2000, but an updated version of the law passed in 2014 and crucially added more oversight to the industry and additional protection for policyholders. The industry is currently regulated by the Ministry of Economy and Finance’s General Department of Financial Industry and represented by the Insurance Association of Cambodia (IAC).
There are seven general insurance companies operating in Cambodia, according to IAC, comprising Asia Insurance, Cambodia-Vietnam Insurance, Caminco Insurance, Forte Insurance, Infinity Insurance, People & Partners and a local branch of Malaysia’s Campu Lonpac Insurance. In 2012, the life insurance industry began operation in Cambodia, and is now represented by four firms: Cambodian Life Insurance, Sovannaphum Life, Canada’s Manulife, and the UK’s Prudential. Cambodia Re is the only reinsurance company operating in the Kingdom, according to IAC.
A small but growing market
Despite a growing number of insurance options available in the Kingdom, market penetration remains low, comments Vatharo. “The share of insurance premiums as compared to Cambodia’s GDP was estimated at approximately 0.45 percent in 2015. This is very low in comparison with other countries in the the region, which averaged around 3.4 percent in 2014,” he says. While this number is indeed low, the industry is growing relatively quickly, according to Vatharo. The number of non-life insurance policies, for example, grew at an annual average of 20 percent over the last five years.
In terms of market breakdown, property insurance leads the way, with a 39.7 percent market share. The reason for this can be directly linked to Cambodia’s property boom, particularly in Phnom Penh. Motor vehicle and health insurance are the next most popular kinds of insurance, according to Vatharo, holding 15.1 percent and 14.1 percent market share, respectively. These are followed by personal accident insurance at 6.8 percent, engineering at 5.8 percent, and marine, aviation and transit at 4 percent.
Of note is the fact that once a client buys one insurance policy, they are more likely to buy a second one, according to Vatharo. “While the number of insurance policies issued keeps increasing, it has also been observed that more people hold more than one insurance policy. This reflects customers’ broader understanding of various potential risks which need to be insured,” he asserts.
Experts agree that Cambodia’s consistently high GDP growth, averaging 7 percent or more over the last decade, and its growing middle class have been conducive to continued industry growth. David Treal, Managing Director of AG Cambodia, believes the industry is showing healthy growth that will continue in the future. “The insurance market is developing at a fast pace with a sharp increase that reflects the booming construction sector and the growing middle class that is beginning slowly to understand insurance solutions,” says Treal.
Vatharo advises however that moving forward in the insurance industry and sustaining growth will require reaching out and educating the population beyond the middle class to understand how insurance can help them. “Many Cambodians do not pay attention to [potential insurance] ‘risk’ or understand this concept. They don’t have insurance, and when they realise the benefits of insurance, it’s sometimes already too late,” he believes. “It is crucial for all stakeholders to put more emphasis on customer education and raising public awareness about ‘risk’, how to assess risk exposure, and understand insurance products and benefits.”
Purchasing an insurance policy
While living, working, or travelling in Cambodia, it is advisable to purchase an insurance policy. Given the high number of traffic accidents in the Kingdom and extremely lax enforcement of driving laws, insuring your motorbike or vehicle is recommended. While locals may attempt to settle who owes who at the scene of a motor vehicle crash, it can quickly get tense and police are often unhelpful. Owning an insurance policy can ensure that you are able to pay for repairs or replace your vehicle.
Health and personal injury insurance are also important considerations, given the high rate of accidents, but also the relatively poor quality of healthcare available in the Kingdom, especially outside urban centres. Even receiving passable care can mean paying top dollar, compared to smaller clinics, and once the patient’s needs move beyond basic care, they may need to travel to Bangkok. This expensive, complex process can be covered by an insurance policy, which can also be designed to cover dental, optical, accident, or maternity health. Fire insurance is advisable for similar reasons, as there are a small number of firetrucks working in Phnom Penh, and even fewer outside the capital.
With a dozen different insurance companies active in the Kingdom, there are many options to choose from to fit your unique personal or business needs. While the industry is still small and relatively young, experts agree these reputable agencies have made a solid start in a sector that only has room to grow. “Great opportunities are ahead and competition will help develop the insurance industry further,” says AG Cambodia’s Treal.