Finance Ministry Drafts Life Insurance Subdecree

A subdecree to regulate a fu­ture life insurance industry in Cam­­bodia has been drafted by the Ministry of Finance and is un­der­­going revision in consultation with insurance industry experts, fi­nance officials said Thursday.

Insurance companies can cur­rent­ly sell general policies such as au­to­motive or fire insurance, but there is no Cambodian-registered com­pany offering life insurance.

“If we can attract the right in­vestors, they could be in place by next year,” Secretary-General of the Finance Ministry Hang Chuon Naron said during a meeting on insurance held at the ministry.

“Life insurance could be of­fer­ed two to three years from now,” he said.

He said major players, such as US-based insurance giant AIG, have explored the potentials of the Cambodian market.

Key provisions under review are solvency, ownership and liabi­l­i­ty requirements. The draft de­clares that life insurance companies be in no other business, and that shareholders owning more than 20 percent of a company must keep the company afloat to the extent they are able.

“We must balance the need to protect the consumer with our abi­lity to attract potential industry in­vestors,” Hang Chuon Naron said.

At the meeting, audience members worried about the definition of life insurance laid out in the sub­­­decree and whether it would con­strict certain types of insurance currently being offered by ge­neral and micro-insurers.

The subdecree would regulate all micro-insurers, so interested par­­ties questioned whether it would limit NGOs from offering crop or credit insurance to the poor. Officials indicated that it would limit NGOs to offering insurance against sickness or death.

Kengo Mizuno of Nomura Re­search Institute said Cambodia could soon experience the rapid growth in life insurance witnessed in Vietnam in recent years.

The institute, a leading Ja­pa­nese business consultant, is re­searching the insurance industries in all of the Asean countries as part of a Japanese technical as­sistance project.

It presented its suggestions to the ministry on Thursday, which included separating general and life insurance industries.

“One of the major factors is if the culture of insurance is adopted by the public,” he said. “In Viet­nam, they have embraced it, in Thailand there has been more of a culture of consumption.”