More coordinated efforts are needed to promote the digitalisation of business models in the insurance sector to raise efficiency in the value chain and create a more diverse spectrum of innovative, suitable and tailored options for products and services in Cambodia, a workshop heard on June 15.
At the workshop, which focused on examining the role of fintech and the insurance sector in the digital economy, Insurance Association of Cambodia (IAC) chairman Huy Vatharo said that insurance companies are rapidly adapting their operations to the new environment of digitalisation, setting out a variety of strategies, ranging from partnerships with insurtech players, to in-house innovation.
“The use of technology in the insurance industry, commonly known as insurtech, has also begun to grow significantly in the insurance market in emerging economies in recent years. In addition, the Covid-19 epidemics in the last two years have led insurers to pay more attention to digital innovations for the distribution of insurance products,” he said.
However, he added that the insurance penetration rate in the economy was only 1.1 per cent in 2021, meaning that the portfolio of insured risks is significantly low and that the protection gap in Cambodia remains relatively large.
At the same event, Insurance Regulator of Cambodia director-general Bou Chanphirou commented that the Kingdom’s insurance market has grown significantly in the last five years, amid the quickening pace of regional innovations and improving attitudes and behaviours amongst insurance customers, both of which he said have been particularly apparent since Covid struck.
“The richness of digital technology and the pursuit of competitive advantages are also driving the growth of insurtech in Cambodia. This has brought a number of challenges, some of which require the Cambodian insurance regulator and relevant institutions to take additional steps to strengthen and ensure the effectiveness of management, control and development of this sector,” he said.
Ministry of Economy and Finance secretary of state, Ros Seilava, who also heads an associated policy drafting working group, told the workshop that the non-banking financial sector, which encompasses the insurance sub-sector, has been playing an important and active role in driving national economic growth.
He added that insurance has made “remarkable progress” and is emerging into a promising sub-sector within the financial ecosystem.
“Although the insurance sector has been growing and has potential, insurtech in Cambodia is still young and is facing a number of challenges, including: a lack of a regulatory framework for governing the digital insurance business, a lack of infrastructure to support both regulatory sandboxes and internet networks in rural areas, a lack of support from actors in the insurtech ecosystem – public and private sectors and development partners – and persistent low levels of financial and digital literacy among the people,” Seilava said.
According to FinTech Global, global investment in insurtech last year is estimated at $13.4 billion, nearly double compared to $7 billion in 2020, and representing an almost fivefold increase over $2.8 billion in 2017.