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
By comparison, Thailand’s Fiscal Policy Office
expects economic growth of between 4.5% and 5.5% in Thailand in
Building on potential
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
“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
“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.
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”.
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,”
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
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”.