Training and financial literacy will be keystones to improving insurance penetration in Cambodia in the next five years, said the Insurance Regulator of Cambodia (IRC). Towards this end, the IRC is planning to set up the National School of Insurance in the Kingdom, officials from IRC said at an event on Tuesday.
Insurance penetration in Cambodia is currently at 1.14 percent; which is calculated as a percentage of total premiums collected to the country’s Gross Domestic Product (GDP). In 2022, insurers in Cambodia collected gross premium of $332 million, up 11 percent from the previous year.
Cambodia is among the countries with a lower insurance penetration rate than other countries. “This presents both opportunities and challenges. And the industry has to look to its partners such as banks to inform people as to the need for insurance,” said Bou Chanphirou, Director General, Insurance Regulator of Cambodia (IRC).
“The regulator is looking to work with all market participants to increase insurance penetration and density in the country,” said the IRC Director General Chanphirou on Tuesday at an event hosted by AmCham Cambodia, titled ‘Leading the Way: The Future of Bancassurance’.
Insurance density was around $20.72 per person in 2023 in Cambodia. This is an improvement from 2018, when insurance density was only $12.10. The NBC said that it is looking to boost the growth of non-banking products. Targeted insurance sales by banks will ensure financial protection for more individuals, said Em Kamnan, Deputy Director General of Banking Supervision, National Bank of Cambodia (NBC).
IRC said that as high as 42 percent of insurance sales in the country was current by banks. After that 24 percent was from direct sales by the insurer; followed by other sales partners like corporate brokers, agents, etc.
Cambodia government has a long-term goal of getting insurance penetration to 5.5 percent and insurance density to $135 by 2030.
Under the regulatory framework, the Council of the Non-Banking Financial Services will work in tandem with the IRC to ensure that there is more insurance penetration in vital sectors such as motor and health insurance.
“The IRC also aims at a policy framework for the creation and distribution of new insurance products. Attention will be paid to priority sectors such as agricultural, natural disaster insurance products, micro-insurance products for women, etc,” said Sngoun Sreynoch, deputy head of the research division, IRC.
As the insurance sector grows in Cambodia, the regulator is well aware of the need for professional training in the industry. “Towards this end, we are planning to set up a National School of Insurance,” which will be launched sometime between 2025-27 as our medium-term goal; and possibly expanded beyond 2029-30 as a long-term goal,” said IRC deputy head of research Sreynoch.
The IRC said it will also be looking at protecting consumer interest and market conduct supervision. Towards this end, it will increase the capacity of the regulator’s officers and establish a mechanism for dispute resolution. When there are issues of insurers not settling or partially settling claims, the IRC hopes the new mechanism can step in and effectively solve disputes.
IRC also said it is planning on setting up a system, where sanctions would be imposed on insurers who are not adhering to market-conduct standards. The IRC also said that it will be setting up an Association of Insurance Brokers in future; creating more associations which are specific to market participants will help in self-regulation.
Another area of improvement, the IRC said it would focus on in the next few years is education and financial literacy. “We will be increasing the number of workshops and public awareness programmes we hold,” said Sreynoch. khmerimeskh
