Expanding Insurance Industry Fighting Its ‘Luxury’ Image

Despite double-digit, industry-wide growth last year and expected growth this year, insurance industry officials say they still face the challenge of a market full of people who have never owned insurance, don’t see its value and are sometimes unfamiliar with how it even works.

“People still think of it as a luxury item, but it’s not,” said Jeffrey Whittaker, chief operating officer for Infinity General Insurance.

Last year, Infinity and Campu­Bank Lonpac Insurance became Cambodia’s fourth and fifth insurance providers, joining Asia Insurance, Forte Insurance and state-run Caminco Insurance.

Insurance companies say that as the economy grows, they are growing too—competing for an expanding market of new business ventures as well as middle class people who don’t have insurance but can afford it.

Potential clients simply need to be convinced that they need the fire, medical, vehicle and other types now offered in Cambodia, insurers say. And their efforts have produced results.

Insurance revenues increased 31 percent from $12.1 million in 2006 to $17.5 million in 2007, according to the Ministry of Finance. In 2002, revenues amounted to only $4.6 million.

Five years ago, many Cam­bodians had never heard of some of the insurance companies now in the country, but then again many Cambodians had never owned insurance before.

“It’s growing. We’re still not getting flooded with individuals…. But it is encouraging,” Whittaker said.

He said that 85 percent of the insurance his company sells is to NGOs, embassies and corporations. He said as more business projects in real estate and other sectors are completed the number of those policies will increase.

About 15 percent of policies at Infinity are issued to individuals, which is a small percentage compared to most countries, he said. He said a 50/50 ratio is a reasonable target over the next 10 years.

“That would be a good goal,” he said, “but I don’t know if we’ll get that—you’d have me dancing and singing in the streets.”

But despite robust growth, revenue is still small for the five insurance companies and one state-owned enterprise that offers limited reinsurance to insurance companies, said Hang Chuon Naron, Ministry of Finance Secretary-General said.

“They cannot survive on that much business,” he said. “They are looking at the next 10 to 15 years and are waiting for more business.”

He said if the economy keeps growing the companies should be fine.

In 2002 the government began issuing licenses to insurance companies, which until then had acted as “agents” for the state-owned Caminco In­surance. That situation exposed the government to risk and was done away with, Hang Chuon Naron said.

Since then companies like Forte Insurance, which began in 1999 and got its license to operate independently in 2003, have seen rapid growth, said Youk Chamroenrith, general manager of Forte.

He compared Cambodia’s insurance industry to Vietnam’s in the early 1990s. He said that more than a decade later their revenues were in the hundreds of millions of dollars.

“Cambodia will continue growing,” he said.

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