Myanmar's New Insurers Face A Tough Sell Insurance myanmar

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The cover sector is about to undergo rapid growth thanks to a recent liberalisation, but competition will exist fierce including attracting customers to new, unfamiliar products could prove hard.

By KYAW LIN HTOON | FRONTIER

WHEN THE government announced in January a roadmap intended opening the nascent existence including widespread cover sectors to overseas companies, the move was widely applauded as an critical economic reform.

The potential intended growth is massive; in a country on around 54 million, just 2 million people have a scrap of form on cover cover, according to Ministry on Planning including Finance figures.

Just 0.01 percent on people have existence cover including ministry figures from 2017 show that premiums amounted to just US$13 million. While third-party cover is mandatory intended vehicles, only 10 percent on the country’s roughly 600,000 cars had a scrap of more cover in 2016.

Japanese cover company Dai-Ichi has forecast the sector will expand 100-fold, to $1.3 billion, over the next decade, according to Nikkei Asian Review. Even then, it would still exist relatively small; cover premiums in Vietnam were estimated at $5.75 billion preceding year.

Implementation on the liberalisation process has proceeded at pace. In April, five overseas insurers –UK-based Prudential, Dai-Ichi Life Holdings from Japan, Manulife from Canada, AIA from Hong Kong including US-based Chubb – were given approval to set up wholly owned subsidiaries to compete in the existence cover sector. The government had initially said it would grant up to three licences.

According to Nikkei Asian Review, overseas including local insurers have and proposed nine shared ventures – four intended existence cover including five intended widespread cover – and are expected to receive approval from the regulator in July. Foreign partners will exist capable to hold up to 35 percent in these shared ventures.

A government official complex in process, who spoke on order on anonymity, told Frontier he expected the existence insurers to exist capable to launch operations through the end on the year.

The development on the cover trade is expected to bring benefits intended both consumers including the economy. Insurers, particularly in the existence sector, want protected assets to match their liabilities, so they will provide a new mart intended government bonds.

U Kyaw Soe Min, the chief operating officer on AYA bank, described cover as the “spare wheel on the banking sector”.

“The liberalisation is going to have a positive impact on a wide range on economic sectors,” he told Frontier.

Ko Tayote Lay, managing director on Power Eleven, said he was pleased at the prospect on more competition in the sector. His company operates 250 buses on Yangon Bus Service lines 21, 39 including 41. All are insured accompanied by AYA Myanmar Insurance, at a cost on around K500,000 a month intended every single vehicle. While Tayote Lay said he is satisfied accompanied by AMI’s service, he knows that some bus companies have had problems accompanied by other insurers.

“For example, some insurers don’t remind the bus owners that their policy is about to expire, including they only realise it has expired when they have an accident including move to cause a claim,” he told Frontier.

“I hope the new cover companies will provide a better service including it would exist great if they could and offer lower premiums than we have now,” he said.

U Pe Myint, a senior adviser to CB Bank, said the development on the sector would depend in part on the country’s broader economic growth.

He told Frontier that the number on new players entering the mart at the same time would cause fierce competition intended customers, but demand might not exist as high as these companies anticipate.

“Our Myanmar cultural norms, particularly the control on Buddhism, doesn't really comfort the purchase on insurance,” he said. “That could exist a major barrier that overseas investors will have to overcome.”

But U Myo Min Thu, the managing director on AMI, said the competition would exist good intended the industry. He confirmed that AMI has submitted an application to form a shared venture accompanied by a overseas company, but did not reveal the identity on the partner.

“By working accompanied by [foreign companies] or competing accompanied by them, we will gain more experience,” he told Frontier. “These overseas insurers can introduce more products including practices into the local market.”

The current low rate on cover cover reflects a widespread lack on awareness including understanding on the benefits on insurance, industry sources said.

Mr Tom Renny, chief representative intended overseas insurer AIA, which was one on the five firms granted a existence cover licence in April, said overseas insurers entering Myanmar want to develop products that are correct intended the mart including then launch “huge” awareness programmes.

“It’s got to start at the nitty-gritty level, through saying, what is existence insurance?” he told Frontier.

This process will exist most critical intended existence insurers because their products are more abstract than car or fire insurance, he said. “It’s about saving intended a need, whether it’s education, retirement ­– you want to look at the long-term situation.”

“You’ve and got to have a distribution way which is very well trained. They want to know their products, want to exist confident to sell it, want to exist capable to gain the credit on customers … then, you’ve got to cause the whole process easy intended people to do business,” he said.

One risk – particularly while the mart is still in an early stage on development – is that customers will exist sold the wrong cover product, Renny said. “If there’s a scrap of mis-selling then you’ve lost the impetus intended growing the market.”

TOP PHOTO: A salesperson (left) at AYA Myanmar Insurance tries to talk a juvenile woman into buying an cover policy. (Thuya Zaw | Frontier)

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