Cambodia’s booming economy coupled with a
competitive workforce and a rapidly growing middle class, appear to
be laying the foundations for a sus­tainable life insurance
industry in the country.

This is supported by senior industry figures who
believe that Cambodia’s life insurance is well positioned to

Cambodia’s macro-economic growth is the first
pillar likely to drive the country’s life insurance sector forward.
This is because Cambodia’s economy grew at almost 10 % per year
between 1998 and 2008, according to the World Bank.

Although this growth was interrupted by the global
economic downturn in 2008-09, Cambodia’s growth momentum is
expected to further increase to 6.5% annually in 2012 and 2013,
driven by strong exports, private invest­ment, and a solid
macroeconomic position.

By comparison, Thailand’s Fiscal Policy Office
expects economic growth of between 4.5% and 5.5% in Thailand in

Building on potential

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David Wong, senior vice-president and chair­man of
Manulife (Cambodia), says: “Cam­bodia has recently begun to
capitalise on its economic potential. Since adopting free-market
economic policies in the 1990’s and increasing its integration
within the interna­tional community, Cambodia’s economy has

Wong explains that Cambodia’s economy is also
benefiting from a young and competi­tive workforce and a rapidly
growing middle-class.

“In view of this, and of the country’s fast
developing yet untapped demand for life insurance, many insurers,
Manulife included, believe the country is well-positioned for the
development of the life insurance industry,” says Wong.

Pankaj Banarjee, general manager of Pru-dential’s
representative office in Cambodia, supports this view. Banarjee
says the Cam­bodian life insurance market has “very posi­tive”
long-term growth potential.

Banarjee explains this is because the demand for
life insurance and other financial products is expected to rise
strongly on the back of robust economic growth in addition to
growing urban population with rising per capita GDP across the
whole populace.

“We believe these [factors] represent a significant
untapped market opportunity for Prudential and that we are well
placed to capture the opportunities there,” says Banarjee.

Competitive landscape

Based on research undertaken by Life Insur­ance
International, There are currently only two life insurers
effectively operating in Cambodia, Cambodia Life Insurance
Com­pany, a state-owned joint venture, started its operation in May
2012 and Manulife (Cam­bodia) started its operation in June

Prudential Corporation Asia announced on 2 July 2012
that it has received in-princi-ple approval from the Cambodian
Ministry of economy and finance to establish a wholly foreign-owned
life insurance operation in the country. Cambodia extends
Prudential’s life insurance footprint in Asia to 13 markets.

Wong says Cambodia is very open to for­eign
investment, allowing 100% foreign ownership of life insurance
companies.  There are also no foreign currency controls in

Banarjee says: “In general, Cambodia has actively
encouraged foreign investment, which has led to economic growth and
urban development over the years. The develop­ment of the financial
services sector is one of the key priorities of the

From a regulatory perspective, insurers also
have room for manoeuvre. Wong notes that the Cambodian regulator is
working on a new insurance law and issuing new regu­lations related
to life insurance and micro-insurance which provide regulatory

However, he says it is “the openness and
progressiveness” of the Cambodian regulator that have given the
multinational life insurers the confidence to invest in the

Benilda Fernando, a director at
PriceWa­terhouseCoopers in Cambodia, describes regulators as
“reasonable” saying they will “take into consideration the
knowledge brought in by foreign investors”.

Market challenges

Wong sees the “lack of local talent” as the initial
largest challenge facing life insurers in Cambodia with a need for
trained actuaries, underwriters, and IT professionals, among

“Life insurance is a new sector in these emerging
markets and we need a lot of exper­tise in various disciplines such
as actuarial, underwriting, claims and life insurance IT systems,”
explains Wong.

Another challenge, according to Fernando, is the
availability of reliable statistics in terms of the valuation of

Finally, to really grow sales, the populace at large
will have to be ‘persuaded’ of the benefits of life insurance.

Banerjee says that Prudential hopes to aid the
spread of knowledge and understanding of insurance protection and
long-term finan­cial planning, thereby supporting the devel­opment
of the Cambodian life market.

This will be essential in driving greater market
penetration, and helping to provide Cambodians with better levels
of protection.

Initially, Wong says Manulife (Cambodia) is selling
a pure life insurance protection product – a ten-year term

“As we get to know the market fur­ther and as the
people get to know more about life insurance, we intend to
intro­duce other key insurance products such as insurance with a
savings element, to cater for saving for children’s education,
retirement planning or other purposes.

He adds that Manulife (Cambodia) is also considering
designing a medical From a regulatory perspective, insurers product
over “the longer term”.