Key issues in the licensing and supervision of microinsurance in Cambodia

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MINISTRY OF ECONOMY AND FINANCE

Key Issues in Licensing and Supervision of Microinsurance in Cambodia

18-20 September 2013, Makati City

KINGDOM OF CAMBODIA

Nation - Religion - King

MEY VANNDirector of Financial Industry Department

Ministry of Economy and [email protected]

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CONTENT

A. Country OverviewB. Insurance Market In CambodiaC. Microinsurance DevelopmentD. Financial Sector Development

Strategy 2011-2020E. Key Issues in Licensing and

Supervision of MicroinsuranceFinancial Industry Department Insurance Division

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A. Country Overview

Financial Industry Department Insurance Division

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A. Country Overview


Population: 14.7M (MEF, 2013)Population in Phnom Penh: 2,009,264 Area: 181,035 sq km (69,898 sq miles)GDP: 15,191M USD(MEF, 2013) GDP per capita: 1,036 USD (MEF, 2013)

GDC Growth rate within 10 years

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A. Country Overview


INTEREST RATE ON DEPOSITS ( in January 2013)

Deposit in Riel (%) Deposit in USD (%) Deposit in Other Foreign Currency (%)

Saving Fixed Saving Fixed Saving Fixed

1 M. 3 M. 6 M. 12 M. 1 M. 3 M. 6 M. 12 M. 1 M. 3 M. 6 M. 12 M.

1.13 2.46 3.3 4.06 4.86 0.81 1.85 2.5 3.25 4.04 0.58 3.31 3.08 3.33 3.65

INTEREST RATE ON LOAN ( in January, 2013)

Loan in Riel (%) Loan in USD (%) Loan in Other Foreign Currency (%)

1 M. 3 M. 6 M. 12 M. 1 M. 3 M. 6 M. 12 M. 1 M. 3 M. 6 M. 12 M.

13.95 13.95 13.95 14.26 13.34 12.37 12.87 13.05 11.75 8.72 10.38 10.41

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B. Insurance Market in Cambodia


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2005 2006 2007 2008 2009 2010 2011 2012

Per-ne-tra-tion Rate

0.00172380645161291

0.00166720879725086

0.00202685053875565

0.00199973677082326

0.00192432057692308

0.00212781829121541

0.00233099691477054

0.00255890109577345

0.03%

0.08%

0.13%

0.18%

0.23%

0.27%

Insurance Penetration Rate 2005-2012

8Financial Industry Department

Insurance Division


2005 2006 2007 2008 2009 2010 2011 2012

Premium 10847914 12128944 17493747 20671279 20012934 24755038 30221375 35962796

$2,500,000

$7,500,000

$12,500,000

$17,500,000

$22,500,000

$27,500,000

$32,500,000

$37,500,000

Premium Growth 2005-2012 in Cambodia

MicroinsuranceAug 2011

Life insuranceMay 2012

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Types of Company

General Insurer Life

InsurerReinsurer MI

NGOsPilot

SchemeBroker Agent Total

Private Company

5 2 1 6 1 3 18

Joint Venture 1 1 1

3

Total 6 3 1 1 6 1 3 21


Number of insurance companies and Distribution channels as at August 2013



Insurance Division

C. Microinsurance DevelopmentIn Cambodia

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C. Microisnurance Development


There are 74% of population which live in rural area There are 70 of MFIs in Cambodia as at January 2013 which are : 37 licenses and 33 certificate (NGOs) included the C.M.K is Credit Mutuel

Loan grew from 2002 to 2010 at USD %51 millionin and USD$439 respectively. Number of MFI borrowers increased from 330,000 to 1.02million between the same period.


Insurance Division

THANK YOU!

CMK 2010 2011 2012

Clients 1,291 2,566 3,666

Saving (USD) 1,099,120 2,510,177 4,831,322

Credit (USD) 567,562 1,301,714 2,137,211



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In 2011, MEF issue a temporary license related to microinurance that distinguished :

1. CBHI which is known as MHI (for non profit) : until now there are 6NGOs1- HIP/ SKY was launch in 20032-CHC was launch in 20123-Other 4NGOs ( CAAFW, BFH, RACHA, CHHRA)

2. Micro insurance in Cambodia ( for Profit) : Prevoir (PKMI) was launch since 2011


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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$105,036 $36,911 $27,978

$436 $27,640

$105,472 $64,551

$27,978

$51,324 $20,493

$6,684

$80,096 $52,611

$100,209

$(25,948) $(8,553)

$(78,915)

Profit and Loss of MHI and Microinsurance as at June 2013

Premium Collect Other/ Donation Total Income Claim Expense Admin cost Profit / (Loss)

SKY

PREVOIR

CHCSKY

PREVOIR

CHCSKY

PREVOIR

CHC

Micro Health Insurance Microinsurance Business


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D. Financial Sector Development Strategy 2011-2020

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The current insurance industry and legal frameworks are developed under the financial sector development strategy (FSDS).

The strategy were updated three times since 2001.

The recent updated strategy (FSDS 2011-2020) was issued by Royal Government of Cambodia (RGC) on November 25, 2011.



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Development Policy Area

Short -TermTarget 2011-2014

Medium -TermTarget 2014-2017

Long-TermTarget 2017-2020

Legal and regulatory framework

-Develop legal framework for life insurance and Microinsurance-licensing Life insurance and Microinsurance business.-Establish a supervisory body for microinsurance

Review insurance regulations to align with the level of market development and consideration to apply to Based Capital (RBC)

Enlarge microinsurance coverage to the need of the poor people.

Development of private voluntary pension

-Develop a legal and regulatory framework for private voluntary pension.- Establishment private pension supervisory body

- Introduction of private voluntary pension- Initiate training programs to public and private academic institutions.

Enlarge pension coverage to the need of the poor people.



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E. Key Issues in Licensing and Supervisionof Microinsurance



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E. Key Issues inLicensing and Supervision of Microinsurance

In 2011, MEF issue circular on Issuance of Temporary License for MicroinsuranceCondition of Temporary Licensing:1/ Microinsurer:

-Minimum paid-up Capital : 150,000USD-Deposit 50,000 with MEF-Maintained 100,000USD as solvency margin

2/ Community Based Health Insurance Implementer (CBHI)-Summit CBHI proposal scheme to MEF-Shall have enough financial resource for at least 3years project

Licensing


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E. Key Issues in Licensing and Supervision of Microinsurance

All microinsurer and CBHI have to comply with :1/ Fit and Proper requirement of the Management2/ Restriction of size of a microinsurer3/ Validity of license for microinsurer: valid for 1 year from the date of issuance .

4/ Microinsurer have to summit audited financial report within 3months after the end of each fiscal year.5/ licensee shall submit statistics and insurance business report such as monthly, quarterly, semester report to MEF before 15th of each month, quarter, and semester.

Supervision

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Challenges

Inadequate legal frame work and market infrastructure Shortages of skilled workers, education and public awareness, little experiences Remains a pilot with commercial insurers and NGOs Small market where the insurance premiums account for less than 0.3% of GDP Little retail distribution low product and distribution innovation Ineffective payment systems and banking penetration Insurance tax rate Retention capacity is low


E. Key issues in Licensing and Supervision of Microinsurance


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E. key Issues in Licensing and Supervision of Microinsurance

WAYS FORWARD: POTENTIAL FOR REPLICATION AND IMPLEMENTAION

Insurance regulation is essential for expanding and building confidence Education and public awareness need to be addressed for both of

microinsurance and social protection Identify interventions on microinsurance and social protection Consensus and collective commitment from all concern authorities and

development partner Priority insurance products such as health and crop insurance Develop microinsurance through a sector base approach


Insurance Division

THANK YOU!

Key issues in the licensing and supervision of microinsurance in Cambodia

Economy & Finance

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