(MENAFN Press) Despite the fact that there were only six insurance companies operating in the Cambodian insurance industry in 2011, the industry is growing.
The global financial crisis affected the industry in 2009 as the non-life insurance segment, the largest segment in the industry, registered a decline of 6.4%.
Insurance penetration, as a percentage of GDP, stood at 0.25% in 2011 which is very low when compared with developed countries. The Cambodian insurance industry is comprised of domestic insurance companies.
The fire and motor insurance categories led the industry as the high rate of road accidents supported the growth of motor insurance and the rising incidents of fires in garment manufacturing plants supported the growth of fire insurance.
Additionally, the inadequate public healthcare system increased the scope for private health insurance in Cambodia. Considering the presence of such factors, the industry grew at a CAGR of 15.7% during the review period.
Introduction of the life insurance segment
Life insurance was introduced in the country in 2011 with the introduction of Cambodian Life Insurance Company and is expected to start its operation over the forecast period.
With the introduction of life insurance, foreign insurance companies operating in the segment in other countries are expected to enter the Cambodian insurance industry over the forecast period.
The entry of foreign insurance companies is also expected to result in a large variety of other insurance products which will attract consumer attention.
High rate of road accidents
A high rate of accidents on roads in Cambodia encouraged Cambodians to invest in motor insurance and third-party liability insurance.
The rate of people killed on Cambodian roads is high compared to other countries with large populations.
Such a high rate of road traffic accidents resulted in motor insurance being ranked as the second-largest category in the Cambodian insurance industry in terms of written premiums.
This also increased the claims ratio in the country which had a direct impact on the insurer's profitability.
Declining public healthcare system
The public healthcare system in Cambodia is one of the most inadequate in the region.
During the review period, the Cambodian public healthcare system registered a decline in terms of service and coverage of population.
A lack of accessibility and poor quality public healthcare drove Cambodians towards private healthcare, resulting in public healthcare accounting for 2% of the country's GDP in 2010.
Such low expenditure is insufficient for providing healthcare services to the country's population.
Considering such ineffectiveness of the public healthcare system, private healthcare in Cambodia is expected to increase over the forecast period.
The demand for private healthcare is expected to drive consumer demand towards private health insurance due to the increase in healthcare costs.
Decline in insurers' profits
The profit of insurers operating in Cambodia registered a decline during the review period.
Revenue generated by the six Cambodian insurance companies increased by 19% in 2011 compared to the previous year.
The rise in premiums was largely driven by the motor and fire insurance categories.
However, reinsurance rates in the country rose as a result of an increase in the number of claims.
The increase in reinsurance costs and number of claims in the two largest insurance categories, fire and motor, curbed insurers' profits during the review period.
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