Cambodia Investment Review
Prudential Cambodia has earmarked a pivot towards digital insurance, green financing transition, and creating more inclusive insurance offers and distribution channels in the rapidly developing industry.
The transformation comes despite Cambodia’s insurance sector only being in the early stage of its development but now following key regional and international trends.
Speaking at the CamTech 2021 Summit Powered by Prudential, Wilf Blackburn the Regional Chief Executive Officer of Insurance Growth Markets at Prudential Corporation Asia said the company has been investing significantly in enhancing digital capabilities.
“We are applying technologies such as AI and machine learning across the entire customer journey – from sales to service – to enhance efficiencies and to bring greater convenience to the people we serve,” Blackburn said
“For example, in some markets, we can now do e-underwriting for selected products. Customers no longer have to wait days to know if they are insurable. With technology, the underwriting decisions can be made in hours,” he added.
Cambodia’s full functions of insurance, namely general insurance, only started with the Insurance Law in 2000 and the regulations in the subsequent years and life insurance only emerged in 2012.
Prudential Cambodia first launched in 2013.
“Such innovation will serve to lower the cost of doing business and make insurance more affordable which ultimately benefits the consumers,” he said.
“The company has launched Pulse by Prudential which is an AI-powered app that is designed to support our customers and the communities in their health and wealth journey,” he added.
Prudential Cambodia moves into green finance transition
Internationally the company has set an ambitious goal this year to improve its ESG and be a net-zero asset manager by 2050.
Environmental, Social, and Corporate Governance (ESG) is an evaluation of a firm’s collective conscientiousness for social and environmental factors.
In addition, the company has also pledged to achieve an interim target of a 25% reduction in the carbon emissions of all shareholder and policyholder assets by 2025.
Speaking about the new targets Kerry Adams-Strump Director of Group ESG, Prudential Plc told the summit that providing financing options for developing countries, such as Cambodia, is a vital component of assisting the world to reduce its carbon footprint.
“Regionally Prudential has most recently invested in the Vietnamese Green Bonds, under the Asian Bond Market Initiative, this bond will fund renewable energy sources for the country,” Adams-Strump said.
During Cambodia’s inaugural Cambodia Climate Change Summit (CCCS21) experts agreed that policymakers must work effectively with the private sector to allow Cambodia to transition into the new green economy.
In response, Prudential has embarked on a pilot initiative creating a public-private partnership to cut the carbon footprint of developing Asia.
The project works by creating a mechanism to acquire and retire coal-fired assets and recycle those funds to accelerate renewable energy.
“This was created with the aim to drive greater accessibility and affordability of financial services, stakeholders from the public and private sectors and academia must work even more closely together, Adams-Strump said.
However, Adams-Strump commented that a lack of ESG data has meant that green bond certification was not possible – despite meeting all requirements.
According to Adams-Strump emerging markets need $1 trillion a year in clean energy investments in order to put the world on track to reach net-zero emissions by 2050 but foreign investment fell 8 percent last year.
“To meet today’s financing needs investment would need to increase seven-fold from 2020 levels,” she said.
Prudential Cambodia offers more inclusive insurance products
Launched last year, the national strategy on financial inclusiveness 2019-2025 has outlined the insurance sector should engage with the banking and finance sector and to bolster the operation of bancassurance.
The joint effort between the two sectors will also raise awareness and confidence among the consumers and public on the insurance service in Cambodia.
Diversifying its products Prudential Cambodia is now offering, through its Pulse product, buy bite-sized insurance products. These products start at less than $10 per year, are simple to understand and purchase, and most importantly have a simple claims process.
According to the company it plans to launch of more such digital and affordable products on the Pulse application.
In Q1 this year Cambodia’s insurance sector continued to grow at 16.3% to record $85 million in total premiums, according to a report from the Insurance Association of Cambodia.
The market size was listed as 1.2 million customers which comprised of 380,000 life insurance clients, 510,000 purchasers of general insurance (health and individual accident insurance), and 280,000 micro-insurance policyholders.
Last year, the sector saw premium growth of 7.3% to $271.5 million as claims paid out to policyholders in 2020 totaled $11.3 million.
Cambodia is considered one of the countries that has the most insurance growth potential with market penetration below 1% compared to GDP.
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