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.

 

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