Cambodia Investment Review
The American Chamber of Commerce in Cambodia (AmCham Cambodia) hosted its first-ever forum on bancassurance, which saw an impressive turnout of nearly 200 people representing almost 60 companies from the banking and insurance sectors. Bancassurance is a financial synergy between banks and insurance companies, which has the potential to transform Cambodia’s insurance industry by making it more accessible to all.
Speaking at the forum AmCham Vice President Christopher McCarthy said the global bancassurance market is projected to grow at a compound annual rate of over 6% through the end of this decade, with much of that growth in developing markets in Asia-Pacific, including Cambodia.
Stakeholders working together
“The National Bank of Cambodia (NBC) and Insurance Regulator of Cambodia (IRC) have been working together to strengthen bancassurance in Cambodia, issuing guidance and prioritizing bancassurance in the IRC’s sector development strategic plan,” McCarthy added.
In 2021, the NBC released its Prakas on Conditions for Bancassurance Business of Banks and Financial Institutions allowing banking and financial institutions to provide more Bancassurance services more widely to contribute in improving financial inclusion in Cambodia by increasing the public’s access to insurance services directly from banking and financial institutions.
Read more: NBC remove referral only model for ‘bancassurance’ sales
The new law has led to more groundbreaking partnerships between banks and insurance companies, which has encouraged trust and fostered long-lasting connections. It has also allowed for a reevaluation of relationships with customers, leading to mutual value creation and unlocking opportunities for both sectors to thrive and flourish.
“Thanks to this innovative approach, Cambodia and the wider ASEAN region have seen a lift in insurance penetration, enhancing the financial well-being of its citizens. Bancassurance is protecting dreams and livelihoods, bolstering financial stability, promoting financial inclusion, and unlocking a future of growth and prosperity,” McCarthy said.
Insurance continues to grow
H.E. Bou Chanphirou, Director General of Insurance Regulation of Cambodia, in his keynote remarks highlighted that bancassurance cannot be implemented without strong commitments, collaboration, and cooperation between the insurance regulator and banking regulator.
“Cambodia’s insurance market has grown at an average annual rate of 25% over the last 10 years, reaching over $330 million in gross premiums by 2022, with bancassurance accounting for over 40% of total sales in 2022,” he said.
“The fast growth of the market has been largely due to the distribution channels of insurance products, including the bancassurance channel, which bridges the gap between the banking and insurance worlds, providing consumers with essential financial protection,” he added.
According to the regulator under the “Cambodia Strategic Development Plan for Insurance Sector 2021-2030,” the distribution system of insurance products in Cambodia is mainly based on insurance intermediaries, including bancassurance.
“The Insurance Regulator of Cambodia has issued guidelines and regulations to ensure the quality and efficiency of insurance agent professionalism and the conduct of insurance agent companies and insurance broker companies in Cambodia,” he said.
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H.E. Bou Chanphirou also expressed confidence that more insurance products would be sold via bancassurance in 2023 and the coming years, contributing to the growth of the insurance market in Cambodia, which has a huge potential to grow given its low penetration rate and density compared to other countries in the region.
The event highlighted the strengths of AmCham in bringing together business leaders across multiple organizations in an open environment to raise awareness and build relationships. McKinsey & Company from Hong Kong also spoke on the subject, adding valuable insights to the conversation.