Gov’t, Firms To Form Life Insurance Company

The government and four international insurance companies signed a preliminary agreement on Tuesday to join forces and form the first life in­surance company based in Cam­bo­dia.

Although a sub-decree governing life insurance has not yet been created, the Ministry of Finance, NTUC Income Insur­ance of Singapore, PT Asuransi Cen­tral of Indonesia, Asia In­surance of Hong Kong and Bang­­kok Insurance of Thailand signed the agreement to form the Cam­bo­dia Life Insurance Com­pany.

“We hope that the new Life In­sur­ance Company will make its contribution to the development of a sound financial sector,” Fi­nance Min­ister Keat Chhon said.

The Finance Ministry has pledg­ed to provide 50 percent of the $7 mil­lion in capital needed for the new company, while NTUC will have a 20-percent stake and the others will offer 10 percent each.

Hang Chuon Naron, secretary-general of the Finance Ministry, said that the five partners would now take six to 12 months to com­plete a feasibility study be­fore the firm can be launched.

Tan Kin Lian, CEO of NTUC, said he foresees the company ex­tending policies to Cambodians in lower income brackets as well as the wealthy elite.

“We can make insurance for a very low cost for low-income people,” he said. “We can make premiums as low as $1 or $2 a month.”

He added that as the incomes of Cam­bodians grow, they will be­come more interested in life, health, ac­cident and disability policies, which Cambodian Life will also be poised to provide.

Under current legislation, no foreign-based companies are permitted to sell life or general insurance in Cam­bodia, he said, though this is not currently ad­hered to.

“Because there is no life insurance company in Cambodia and there are expats who need these services, the government has chosen not to enforce the provision re­garding life insurance,” he explain­ed.

However, once there is Cambo­dia-based life insurance, the government will enforce the regulation, he said.

Foreign life and health insurance companies would then have to establish full-service offices here and be subject to Cambo­dian law to sell policies, he said.

Charles Cheo, deputy managing di­rector of Forte Insurance, which claims to be the largest general in­surer in Cambodia, said a life insurance industry could take some time to develop.

“To sustain a life insurance industry, you need to have an investment climate…you need to have somewhere to invest the premiums,” he said, adding that with small premiums, it might be tough for a life in­surance company to make a profit. “One- or two-dollar-a-month premiums sounds tough,” he said.

On the streets of Phnom Penh on Wednesday, several residents said they would welcome life in­surance.

“I like the idea, but don’t know how the system would work,” said a tuk-tuk driver and father of three named Kar, adding that in the tour­ist season he can earn $500 a month.

A motorbike-taxi driver who gave his name only as Saray, a 37-year-old father of two, said life insurance sounded like an attractive prospect.

“My fees might be enough to pay one or two dollars a month in the long run, over 10 or 15 years,” he said.

 

Related Stories

Latest News

The Weekly DispatchA weekly newsletter from The Cambodia Daily delivering news, analysis and opinion to your inbox. Published every Friday at 11:30am. Sign up today.