Revenue generated by the country’s insurance firms increased 25 percent to $22 million in the first six months of this year compared to the same period last year, according to data released Tuesday by the General Insurance Association of Cambodia (GIAC).
Engineering insurance has become the sector’s backbone, with a 102 percent increase in premiums to $2.4 million between January and July, while the second-largest jump was fire insurance, which grew 35 percent to about $7 million.
A premium is the amount of money charged for a specific insurance coverage.
Health and vehicle insurance premiums grew only slightly, with a combined total of 11 percent to $3.22 million and $3.8 million, respectively.
Oeurn Chanvisoth, secretary of GIAC, said the growing need for factories, roads, bridges and hydropower dams in the country has driven the construction sector, resulting in an increase in engineering insurance premiums.
“We have started to work more with construction, as it is growing. For example, after a company finishes its hydro-dam construction, it will install machines that need to be insured,” he said.
While insurers have recommended that property and factory owners turn their attention to risk management, claims paid out in the first six months of this year dropped 63 percent to $3.4 million compared to the same timeframe last year, according to the data.
“If we compared this year to last year, we have not seen big [fire] accidents with factories,” said Ty Atith, vice president of Cambodian Reinsurance’s operation department. “The factory owners know how to [prevent these incidents] through risk management.”
For years, insurance firms have found it difficult to gain a foothold in the market, as Cambodians are still unaccustomed to the idea of having insurance.
“Our premium scale remains very low if you compare to Thailand and Vietnam. We are aware already that almost 85 percent of insurance clients are foreigners running the business in the country,” said Youk Chamroeunrith, general manager of Forte Insurance.
He said the sector’s overall premium revenue has grown 20 to 25 percent every year to just more than $30 million since in 2000—a miniscule amount compared to the insurance sectors in neighboring Thailand at $7 billion and Vietnam at $2 billion.