Indochine Insurance, the country’s leading private insurer, has closed its doors after failing to meet the legal requirement of capital investment, company and government officials said Sunday.
More than two months after the Ministry of Finance ordered the company’s closure and froze its bank accounts, Indochine declared insolvency Friday and let go 55 employees, according to a company news release.
Ministry officials charged that Indochine, since becoming a fully licensed private company last year, flaunted a law requiring at least a $7 million capital investment and $700,000 deposit at the National Bank of Cambodia.
The company deposited only $100,000 at the bank and fell short of the mandated capital investment, said Mey Vann, director of the ministry’s Finance Industry Department.
“We can’t allow them to operate without the capital,” he said.
Despite government pressure, the company continued to operate and late last month announced deals with a French insurance company and a separate investment bank—moves it hoped would help procure $6 million.
“However the Ministry of Economy and Finance decided that the investment came too late,” the company’s release read.
“Unable to cash in payments from clients for more than two months, the management of the company had no choice but to shut down operations,” it reads.
The ministry gave Indochine several warnings of its impending closure over the last year, Mey Vann said, and has filed a court complaint against the company.
His office could not confirm whether Indochine had formalized its planned merger with insurance giant Macif, he added.
It was unclear Friday if or how Indochine clients will be compensated. In its release, Indochine said the government will seize its $100,000 deposit to liquidate the company and directed all claims and complaints to the ministry. But Mey Vann said claims are the company’s responsibility.
Company Director Philippe Lenain, who on Sunday declined comment, has called the investment laws excessive and hinted at a scheme to undermine Indochine and benefit the state-run insurance company Caminco. Indochine has operated in Cambodia for more than 10 years.
An executive at a rival private company, however, said the closure proves the ministry is enforcing nascent insurance laws established since 2000.
“These things are stated clearly in the law,” said Charles Cheo, executive director of Forte Insurance. “This just shows that the government is serious about compliance.”
