AN Overview of the Insurance Market in Cambodia 29th East Asian Insurance Congress Manila, 06 – 09 May 2018 By Dr. Or Saovanna Insurance Association of Cambodia

Contents Overview of Cambodia Insurance Market Overview Key Insurance Regulation Highlights

1. Overview of Cambodia Population: 15.80 Million Language: Khmer Demography: Young Population (75% is below 45 years old) Political System: Constitutional Monarchy Economy: Free Market Pillars of Economy: Industry, Services, Construction and Agriculture Foreign Direct Investment is highly welcomed with a lot of incentives from the government. 1 2

1. Overview of Cambodia Economy grew around 7% in the last 5 years. Strong economic growth is expected to continue in the medium term. The growth of 7% in 2017 was driven by the robust performance of construction, garment, and tourism sectors. These growth bases will remain key drivers for economic growth in the next few years. Source: World Bank and Ministry of Economy and Finance

Insurers/intermediaries 2. Insurance Market Overview Insurance Companies and Intermediaries: Foreign ownership of insurers is permitted without limitation as to shareholding. Out of 26 insurance companies, 15 is foreign owned. Insurers/intermediaries 2012 2018 Non-life Insurers 6 11 Life Insurers 3 7 Micro Insurers 2 8 Reinsurers 1 Brokers 13 Agents (Corporate) 15 Loss Adjusters

2. Insurance Market Overview Market Size and Growth: The overall market premium grew well in advance of GDP growth with an annual average growth of 33.4% annually in the last 5 years. The industry expanded robustly in 2017 with y-y growth of 27.2%, driven by the high growth of life and micro insurance. The growth of non-life insurance tended to slow down in the last few years. USD million Source: Insurance Association of Cambodia

2. Insurance Market Overview Market Size and Growth: Total assets of insurance companies reached USD 319 million in 2017, increasing 50% Y-Y. On the similar trend, total equities reached USD 191 million in 2017, up 49% versus 2016. Source: Ministry of Economy and Finance

2. Insurance Market Overview Non-life’s GWP: the general insurers write a wide range of traditional insurance covers. In 2017, GPW grew 7.1%, driven by medical, motor and miscellaneous lines. Fire insurance remains the largest class with a share of 37% of total written premium, followed by medical and PA 27% and motor 15%. Overall loss ratio for non-life insurance market stood at 27% in 2017. Source: Insurance Association of Cambodia

2. Insurance Market Overview Market Concentration for Non-life Year 2012 2013 2014 2015 2016 2017 Top Company 34.0% 38.0% 45.1% 45.2% 46.9% 45.7% Top 3 company 68.5% 69.8% 73.1% 72.2% 72.9% 71.4% Distribution Channel Most distribution is through in-house sales forces or direct client contact and, increasingly, by bank referral. Most of licensed corporate agents are banks mostly providing referral for life insurers. Mobile phone is also available for micro insurance. Penetration: Insurance penetration is still small as compared to those market in the region. The penetration reached 0.7% in 2017 up from 0.6% in 2016.

3. Insurance Regulation Highlights Insurance Regulator: the Ministry of Economy and Finance is competent to issue regulations and to manage and control the conduct of insurance businesses. Licenses: Insurers, insurance brokers, insurance agents and loss adjusters may be licensed by the regulator. Only insurance company licensed in Cambodia may underwrite insurance business in Cambodia. A reinsurer may operate from abroad without a license. Type of insurance license: life insurance - includes insurance on life, health and accident to individuals. Non-life insurance - includes property insurance, liability and health. Micro insurance - coverage for the low-income group of the population covering property, life insurance and PA with sum insured not more than USD 5,000.

3. Insurance Regulation Highlights Non-admitted insurers: Non-admitted insurance is not permitted. Insurance must be purchased from insurers licensed to underwrite insurance business in Cambodia. Minimum Capital: USD 7 million for an insurance company (life and non-life). Rule-Based Solvency requirements: USD 3.32 millions, if the previous year’s total net premium below USD16.6 millions. 20% of last year’s gross premium, if the previous year’s total net premium is between the [USD16.6m – USD83.1m] range. USD16.6m + 10% of the portion amount exceeding the USD 83.1m, if the previous year’s total net premium is over USD 83.1 m.

3. Insurance Regulation Highlights Retention: a limit on the retention for any one risk is set at 10% of the combination of current capital and reserve fund of the insurance company. There is no minimum limit. Compulsory Insurances: Motor third party liability, for commercial vehicles only. Third party liability for construction sites. Liability to passengers on all forms of passenger transport means. Professional indemnity for insurance brokers.

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