Hong Kong-based life insurer AIA Group, the world’s second largest insurance company, is optimistic about the Cambodian market after opening its first office in the Kingdom a few months ago in a bid to expand its regional network.
Ng Keng Hooi, the chief executive and president of AIA, told reporters during a regional media gathering in Hong Kong last week organised by the company that Cambodia has huge potential in the sector, despite insurance penetration in the country still being small compared with other countries in the region. Hooi said that the presence in the local market of AIA is strong indication that the sector has achieved some level of maturity.
Although the company has been hesitant to roll out its complete suite of products and services in the Kingdom, Hooi said the market exhibits numerous positive signs, including plenty of room for future growth, particularly taking into consideration the country’s young and dynamic labour force. “Cambodia is not yet a highly attractive market for AIA. While the country is not a priority at the moment, we are investing in it because we believe it has great potential,” he said.
“The insurance industry in Cambodia is growing in line with the rest of the economy. The excitement and ambition of young Cambodians assures me that the economy will continue to grow in the long run. We want to be part of that growth, and we want to contribute to the prosperity of the country,” added Hooi.
In Meatra, the director of the Ministry of Economy and Finance’s Insurance and Pension Department, said in July that the insurance industry in Cambodia is young compared with its regional counterparts and the sector is still in need of insurance operators to improve their products and risk assessment skills and increase trust from potential clients.
“Building human resources is the main focus even within markets with more advanced insurance sectors. Even though the Cambodian insurance industry is not big yet, there is still plenty of opportunity for growth in the near future,” said Meatra during the seminar on liability insurance. According to Meatra, Cambodia’s general and life insurance premiums amounted to $85.5 million in 2015, approximately 0.45 percent of the country’s national domestic gross product (GDP).
Compared to other ASEAN economies, Cambodia’s insurance penetration rate is still low. Malaysia’s premiums in the life segment, for example, account for 3.3 percent of its GDP, while premiums in the non-life segment are 1.8 percent. In Singapore, life insurance premiums amount to 4.3 percent of the country’s GDP, while non-life premiums represent 1.5 percent.
Meatra said the development of the country’s insurance sector was a priority in the Ministry of Economy and Finance’s 10-year Financial Development Strategy.
AIA officially launched operations in Cambodia in May, becoming the sixth life insurer to join the local market. Currently, according to Hooi, the company is trying to build up a strong sales team and cooperate with the existing banks in order to reach out to people and increase awareness about the importance of becoming insured.
“We are really pleased to be in Cambodia and very pleased to be a part of this fast growing economy. We are a modern company and have set up in the Kingdom as a paperless enterprise,” he said. “Of course, our investment in Cambodia is long-term. We are working hard to do the right thing, in the right way, and with the right people. Right now, as we are a new company, we have many things to work on. We want to make sure that our focus is on the right things. We have a strong partnership with Public Bank and we hope it will allow us to develop the young and talented local workforce.”
According to data from the Insurance Association of Cambodia (IAC), premiums in the life and non-life segments rose 38 percent year-on-year in 2015, reaching $85.5 million. Vatharo, the president of IAC, said that during the first three months of 2017, premiums in the non-life segment reached $20.3 million, an increase of 20.3 percent compared with the same period last year. In the life segment, according IAC’s figures, premiums during the first three months of the year reached $8.9 million, compared with $4 million in the same period last year.