The Insurance Regulator of Cambodia (IRC) has a vision of expanding the value of private insurance premiums to 5.5 per cent of the Kingdom’s gross domestic product (GDP), likely through the introduction of compulsory private vehicle insurance, according to an IRC senior official.
Va Vichea, director of the licensing and legal affairs department at the IRC – which operates under the Ministry of Economy and Finance – presented a report which detailed that at present, Cambodia’s insurance premiums equate to 1.1 per cent of the total value of GDP.
The figure is higher than in Myanmar or Laos, but less than the two per cent of Vietnam or the five per cent in Thailand.
“We have a vision of increasing the total value of the insurance market to $790 million over the next two years, and to $2.4 billion – 5.5 per cent of GDP – by 2030. This can be achieved through the introduction of compulsory private vehicle insurance,” he said.
“This is ambitious, but it is achievable. Insurance is nothing more than mutual protection for the people,” he said.
Imposing insurance obligations on private vehicles would be a driving force for growth in the sector. Vichea could not confirm the timing for the implementation of obligatory insurance, as the decision would be up to the government.
“I believe that if we require all cars to be insured, we can achieve the 5.5 per cent [target],” he said.
He claimed that Cambodia loses more than $400 million per year due to traffic accidents, a huge financial loss, not to mention the loss of life. He was aware that the implementation of compulsory insurance would attract some criticism, but expected it to become as normalised as the obligation to wear a helmet or have mirrors on a motorcycle.
Insurance Association of Cambodia (IAC) chairman Huy Vatharo said the government’s current risk reduction work has been focused on education and the promotion of the use of seatbelts and safety helmets.
“Transferring the risk to insurers through insurance is a method used in developed countries, and it ensures financial stability,” he explained.
According to the report, gross insurance premiums have risen sharply in the financial markets. Gross premiums for general insurance services were about $36 million in 2012, but jumped to $132.3 million in 2022. Gross life insurance premiums moved from about $ 100,000 in 2012 to $193.8 million in 2022. Micro insurance premiums were $5.7 million in 2022. Total insurance market premiums were $36.1 million in 2012, or 0.26 per cent of GDP, but rose to $331.9 million in 2022, or 1.17 per cent of GDP.
In 2012, claims equalled $17.7 million, while $36 million was collected in premiums. By 2022, claims hit $46.6 million, from over $331 million in premiums. The report said $31.5 million was paid in general claims, $14.2 million in life claims, and $0.9 million in micro insurance claims.
At present, 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. Nineteen insurance brokers, 34 insurance agencies and two risk assessment companies currently compete in the market.