Cambodia’s insurance sector sees slower growth amid global economic downturn

Cambodia’s insurance sector sees slower growth amid global economic downturn | Insurance Business Asia

Insurance News

Cambodia’s insurance sector sees slower growth amid global economic downturn

IRC recognizes potential influence of the sector

Insurance News

By
Jonalyn Cueto

In 2023, Cambodia’s insurance industry faced a sluggish pace of expansion, registering a modest 3% year-on-year increase in premiums, totaling $342 million, compared to $331.8 million in the previous year.

A report recently released by the Insurance Regulator of Cambodia (IRC) shows the country closed the year with a total of 41 insurance entities. Among these, 18 are general insurers, 15 specialize in life insurance, while seven operate as micro-insurance providers, alongside a sole reinsurance firm. The report said the sector has total assets nearing $1 billion.

In terms of claims disbursed, insurance companies paid out a total of $60.8 million in 2023, marking a substantial 30% surge from the $46.6 million recorded in 2022.

Factors constraining the nascent growth of the sector

Bou Chanphiru, the director-general of IRC, noted Cambodia’s political stability and consistent economic growth over the past two decades as pivotal factors propelling the remarkable expansion of the insurance sector. He further emphasized the sector’s crucial role in bolstering social security and the national economy.

However, despite the sector’s progress, Chanphiru highlighted persisting challenges, notably the low insurance contribution rate and density. In 2023, insurance contributions merely accounted for 1.14% of the economy, with an average density of $20.72 per capita.

“The indicator shows that the … insurance market still has significant potential for future development, but the industry also faces several challenges such as lack of insurance skills and public awareness,” he said.

Youk Chamroeunrith, group CEO of Forte Group, acknowledged the industry’s sluggish growth, attributing it to the broader economic slowdown gripping the region and beyond.

“I see that general insurance continues to grow but very slightly. However, life insurance experienced a dip last year. Thus, the low growth of the industry was supported by the growth from general insurance,” he said.

Forte Group observed a modest 5% increase in Forte General, while Forte Life encountered a slight decline, partly influenced by minimal increments in bank loans, given their collaboration with banks in extending insurance services to borrowers.

Analyzing 2022’s performance, the insurance sector witnessed gross written premiums (GWP) totaling $331.8 million, a 10.68% rise from the previous year, as reported by the IRC. Noteworthy increases were observed across life, general, and micro insurance premiums, reaching $193.81 million, $132.34 million, and $5.716 million, respectively.

While the sector reflects resilience amid economic headwinds, sustaining growth hinges on addressing inherent challenges and fostering broader public engagement with insurance products and services.

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