Obstacles Hinder Microinsurance Market

A majority of Cambodians would likely purchase microinsurance for their health and crops but are not doing so because they don’t know about the insurance options available to them, and insurance companies lack the cash to expand their services, experts said Monday.

In a new study entitled Understanding and Needs of Low-Income Populations Regarding Microinsurance, released Monday at a seminar at the Sunway Hotel in Phnom Penh, the U.N. Development Program (UNDP) states that 78 percent of the 302 Cambodians interviewed said they would be interested in microinsurance, mostly for help if they fall ill.

“Overall 78% of respondents said they are willing to transfer their risk to other organizations by paying a fee…. The top risks most respondents want to transfer are illness of a household member, crop failure, and accident. Just over half of respondents ranked illness of a household member as the top risk to transfer,” states the report.

Microinsurance is similar to regular insurance programs, but targets poor populations. In Cambodia, most services start at $2 per person annually.

But while the study says there is demand for microinsurance, officials said the lack of knowledge among Cambodians about microinsurance and limited funding to insurance operators from investors hinder the sector’s growth.

“[Microinsurance companies] don’t see much value added here. They are not seeing this market as profitable. They are not targeting the people’s needs, using a one-size-fits-all model and not finding out much as to what people want. So there’s no trust to buy,” said Marisa Foraci, a social protection economist at the UNDP who worked on the study.

She said she did not know how many people have microinsurance in Cambodia.

Currently, there is only one microinsurer licensed by the Ministry of Economy and Finance, Prevoir Kampuchea Micro-Life Insurance PLC, a subsidiary of France-based Groupe Prevoir France.

Matt Walsham, management adviser to the Social Health Protection Association (SHPA), a local umbrella organization that supports NGOs that offer microinsurance, said SHPA is trying to help NGOs inform people of the benefits of microsinsurance.

“We want these products to be available to everyone…but some operators don’t have enough funds to operate,” he said.

Mr. Walsham said 10 NGOs who work with SHPA in 15 districts in about seven provinces, including Phnom Penh, have a total of about 160,000 people enrolled in microinsurance, mostly for health.

He said the NGOs’ packages cost between $2 and $6 a person per year and can cover the complete costs of medical care for each insured person.

“A standard benefit package covers the costs of a government-run public health center. Other packages offered go from provincial to national hospitals, and all costs are covered,” Mr. Walsham said.

When asked how the government could help bridge the gap between provider and client, Mey Vann, general director at the Ministry of Economy and Finance, said the sector is too new to say.

“We don’t know. We are only talking about the need of the provider and the expectations of the market. We are just starting to explore,” he said.

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