The American Chamber of Commerce (AmCham) in Cambodia hosted an event titled 'Leading the Way: The Future of Bancassurance in Cambodia’ in Phnom Penh on March 5, 2024 aimed at providing insights into the evolving landscape of bancassurance in Cambodia.
AmCham has held previous sessions on bancassurance, and the 2024 event was joined by several guest speakers, including Ivana Tranchini, Country Manager of Visa Cambodia; Em Kamnan, Deputy Director General of the National Bank of Cambodia (NBC); and H.E. Bou Chanphirou, Director General of the Insurance Regulator of Cambodia (IRC).
In her welcoming speech, Tranchini highlighted the rapidly evolving landscape of bancassurance and insurance, which is a fundamental part of the Cambodian financial fabric.
With the Cambodia Strategic Development Plan for the Insurance Sector 2021-2030 determining a target of 5.5 per cent insurance penetration rate (up from the current 1.14 per cent) and USD $135 for insurance density per capita by 2030, Tranchini emphasised the crucial role of the banking industry in achieving this plan.
“The banking industry obviously has a crucial role to play in making this plan a reality by allowing the insurance sector to leverage its extensive network, customer base and digital capabilities to distribute insurance products to the masses,” she said.
The State Of Bancassurance In Cambodia 2024
Cambodia’s Expanding Insurance Market
H.E. Bou Chanphirou remarked that the Cambodian insurance market has experienced significant growth, with an average annual growth rate of 20 per cent over the last 20 years. He further shared that in 2023, the Cambodia insurance market:
- Reached more than USD $342 million in gross premiums
- Total assets exceeded USD $1 billion
- Shareholders' equity funds reached USD $450 million
The Director General of the IRC confirmed there are currently 40 licensed insurance companies operating in Cambodia, including 18 general insurers, 14 life insurers, seven micro-insurers, and one reinsurer.
Chanphirou added:
Despite this significant growth, the insurance sector in Cambodia has contributed to the economy at a penetration rate of only 1.14 per cent and an insurance density of just over USD $20 per capita in 2023.
He emphasised that these indicators demonstrate an “untapped potential for growth in Cambodia's insurance market compared to other countries in the region”.
However, they also present challenges, such as a lack of public awareness and education in outreach programs, and limited distribution channels. For instance, Cambodian banks with corporate agent models are only allowed to sell very basic products with limited product presentation, which is not as comprehensive as the bancassurance agent model observed in other countries.
"This is the next step we have to move towards in the future, we have to identify the reason behind the issue and tackle it," said Chanphirou, further noting that a significant issue in the sector is a lack of human resources with insurance expertise, particularly in insurance agency professionalism.
The Growth Of Banking And Bancassurance In Cambodia
According to Em Kamnan, as of February 2024, the NBC has approved a number of banks and financial institutions to conduct bancassurance business, of which:
- 24 institutions, around 1,432 branches, employ a referral model
- Five institutions, around 779 branches, employ a corporate agency model
Kamnan added that from 2015 to 2021, Cambodia's financial inclusion rate increased from 59 to 67 per cent, while the number of insurance users also increased from 4 to 12 per cent.
“It is noticeable that the bancassurance industry has developed, and the rise of digital banking and insured tax, for example, present another opportunity for the bancassurance business [in Cambodia],” he said.
According to Global Data, the gross written premium of the Cambodian insurance market reached USD $355.8 million in 2022. The market is projected to achieve a compound annual growth rate (CAGR) of more than 9 per cent during the 2023 to 2027 period. Kamnan added that Cambodia’s banking sector witnessed moderate growth in 2023, including:
- 8.6 per cent Asset Growth, valued at USD $84 billion
- Almost 5 per cent Credit Growth to USD $57 billion
- 13 per cent Deposit Growth, reaching USD $48 billion
The NBC also continued to collaborate with the UN Capital Development Fund (UNCDF) by conducting more mobile tracking surveys in 2021, in order to further enhance financial inclusion in the country.
Challenges Of Bancassurance, Adopting New Technology And Building Trust
Tranchini said Bancassurance faces its own set of challenges and requires a high level of coordination and integration between the insurance and banking sectors, as well as a focus on education, robust infrastructure, and a skilled workforce.
She further stressed that digitisation plays a key role in the alignment between insurance and banking. New technologies such as artificial intelligence (AI), big data, and cloud computing, have the potential to revolutionise the bancassurance sector by offering tailored, convenient, transparent, and affordable customer-centric solutions. However, Tranchini noted that digitisation alone is not enough.
“We also need to build trust, and to build trust, we need to ensure that our products and services are relevant, reliable, and responsive, and we need to ensure the customer is satisfied not only with the outcome, but also the experience,” she said.
Development Of Cambodia’s Insurance Sector
Chanphirou mentioned that the IRC has outlined a strategic plan to enhance professional capacity through the following initiatives:
- Conducting agency training programs;
- Issuing a Prakas (regulation) on the requirements and procedures necessary for registering individual agents via an automation system;
- Developing guidelines and a Code of Conduct for insurance agents.
The establishment of a Cambodia Insurance School is also prioritised in the IRC's strategic plan.
Watch B2B Cambodia's interview with Hout Ieng Tong, President & CEO of Hattha Bank:
While speaking with B2B Cambodia, Hout Ieng Tong, President & CEO of Hattha Bank, stated that both the concepts of insurance and bancassurance are relatively new to Cambodia, but the trend is already growing. He explained that bancassurance was formalised in 2021 by the NBC and the IRC but Hattha Bank, for example, had already been offering bancassurance services since 2018 in partnership with Sovannaphum Life Assurance Plc.
"We started with nothing in 2018, but by 2023, we had grown a lot,” said Ieng Tong. “We have issued more than 190,000 insurance [plans] to our customers, and Hattha Bank has approximately half a million customers."
He added that he hopes to expand the bancassurance services offered at his bank in the future and wishes to see regulation in this industry become more open.
"I think we currently use a referral model, where our staff refer our customers to insurance companies we cooperate with. I think in the future, [regulations] should be more open and widen the scope for [what services] banking institutions [can offer], not just referrals. The regulations in Cambodia can still be opened up,” Ieng Tong concluded.