Aiming to expand the value of private insurance premiums and enhance financial stability in the country
The Insurance Regulator of Cambodia (IRC) is setting its sights on increasing the value of private insurance premiums to 5.5% of the Kingdom’s gross domestic product (GDP) by introducing compulsory private vehicle insurance. This ambitious plan aims to bolster the insurance sector and ensure financial stability in the event of traffic accidents.
Present Scenario: Cambodia’s Insurance Premiums
Va Vichea, director of the licensing and legal affairs department at the IRC, presented a report detailing the current state of insurance premiums in Cambodia. As it stands, Cambodia’s insurance premiums amount to 1.1% of the total value of GDP. This figure surpasses those of Myanmar and Laos but falls short of Vietnam’s 2% and Thailand’s 5%.
A Vision for Growth
Vichea outlined the IRC’s vision to increase the total value of the insurance market to $790 million over the next two years and $2.4 billion – 5.5% of GDP – by 2030. Compulsory private vehicle insurance is seen as a driving force for this growth. However, Vichea could not confirm the exact timing for the implementation of obligatory insurance, as the decision ultimately lies with the government.
The Impact of Traffic Accidents on Cambodia’s Economy
Traffic accidents result in significant financial losses for Cambodia, amounting to more than $400 million per year. Vichea acknowledged that the implementation of compulsory insurance would likely face criticism but argued that it would eventually become as normalized as the obligation to wear helmets or have mirrors on motorcycles.
Government’s Efforts in Risk Reduction
Huy Vatharo, chairman of the Insurance Association of Cambodia (IAC), noted that the government’s current risk reduction efforts mainly focus on education and promoting the use of seatbelts and safety helmets. He emphasized that transferring the risk to insurers through insurance is a method employed in developed countries, ensuring financial stability.
The Growth of Insurance Premiums in Cambodia
According to the report, gross insurance premiums in Cambodia have seen a sharp increase. In 2012, gross premiums for general insurance services were about $36 million, jumping to $132.3 million in 2022. Gross life insurance premiums increased from about $100,000 in 2012 to $193.8 million in 2022. Microinsurance premiums in 2022 stood at $5.7 million. Total insurance market premiums rose from $36.1 million in 2012 (0.26% of GDP) to $331.9 million in 2022 (1.17% of GDP).
Claims and Payouts
In 2012, claims equaled $17.7 million, while $36 million was collected in premiums. By 2022, claims reached $46.6 million, with over $331 million in premiums. The report showed that $31.5 million was paid in general claims, $14.2 million in life claims, and $0.9 million in microinsurance claims.
The Cambodian Insurance Market Landscape
Currently, there are a total of 40 insurance companies operating in the Kingdom, including 18 general insurers, 14 life insurers, seven micro insurers, and one renewal company. The market also comprises 19 insurance brokers, 34 insurance agencies, and two risk assessment companies.