B2B Cambodia's 'Riel Movers' offers in-depth video interviews with influential leaders who inspire, impact, innovative, and create positive change in the Kingdom's business community.
The show's first guest is Youk Chamroeunrith, Group CEO of Forte Insurance. Established in 1999, Forte Insurance is one of the most successful insurance companies in Cambodia, with a significant market share in the insurance industry.
Together with our host, Anthony Galliano, Chamroeunrith discusses Cambodia's insurance industry from its inception to the present day and shares the secrets to his success.
A Leader Of Cambodia's Insurance Industry
Chamroeunrith has been involved in Cambodia's insurance industry since its very beginning. He was involved in the signing of an insurance policy back in 1994 when the country had yet to pass a national insurance law. At the time, there was only a Prakas issued by the Ministry of Economy and Finance on taxing imported cargo on CIF (cost, insurance and freight).
Cambodia's insurance industry is now celebrating 25 years. Forte Insurance was first established in 1999 to become one of the first insurance companies in the country. Today, it continues to enjoy success with a 45 per cent market share among 18 players in the industry.
Chamroeunrith attributes his company's continued success to its focus on human resource development.
“I think this was the key to Forte's success, because when we started, insurance was very new in Cambodia and a lot of people didn't understand it, even our staff did not understand insurance,” said Chamroeunrith. “We needed to provide them with training and capacity building that has made us successful until now.”
He added that his company provides professional training to its staff by linking with regional and international insurance institutes like in Malaysia, Singapore, Australia and the United Kingdom. Through these institutes, Forte staff have been able to access both hard and soft skills training.
Cambodia's Evolving Insurance Market – Movement Towards Mergers & Acquisition
In Cambodia there are currently 18 general insurers in the market. However, 75 per cent of the market share is with five players, meaning the rest of the 13 have only 25 per cent of the market. In this climate, long-term survival might not be feasible for all insurance companies, hence, there is a possibility of mergers and acquisition (M&A) activity to increase, particularly for insurers in the lower tier of market share.
“I think this is the trend of a developing a financial market,” commented Chamroeunrith. "At the start, everyone feels that it is a good opportunity to invest in a financial industry like insurance or banks, but when they start to operate, it's not really easy, especially for those that cannot get a market share.
If you don't have a market share, capital investment will deteriorate from year to year because you make a loss, and this is where M&A will come in. I think it is a normal trend for M&A to come. I foresee that within two to three years, there will be some M&A – one is a merger among players in the market, and another is regional or global insurance companies coming to Cambodia to look into the opportunities here, because they have experience, they have deep pockets, and they have a human capital, which is very important. They can come in and grow the market together.
Challenges In Cambodia's Insurance Industry – Increasing Understanding Of The Importance Of Insurance
Cambodia's insurance penetration in 2023 was below 2 per cent (only 1.14 per cent), with a density of just a little over USD $20 per capita, which is quite low compared to other countries in the region.
“The insurance business in Cambodia is still very new, starting from 2013 up to now, which is 21 years," said Chamroeunrith.
“If you look at other countries, even Laos, they started earlier than us, their industry has like 30 years of history. Vietnam has always had insurance, Thailand's insurance history, I think, is one century already, Europe four centuries, but Cambodia is just the youngest one in the market,” he added.
He stressed that because the industry in Cambodia is still so young, there is still a limited understanding of the importance of insurance.
Right now, we put a lot of effort into educating the people, [we try to] educate university [students] and the wider community to better understand insurance.
He also added that the legal framework on insurance in Cambodia is still lacking, preventing a stronger push for more growth.
“We have a lot of things to do to grow the market," he concluded.
What Can Cambodia Do To Attract More Investors?
Chamroeunrith pointed to Cambodia's strong legal framework around investment as something that can be attractive for foreign investors. He also, however, outlined a number of areas that that country should look into further developing in order to attract more investment, including building the capacity of human resources, energy costs and logistics infrastructure.
We need to build our own human resource capacity that, because if [an investor] establishes a factory in Cambodia, if they hire technically-skilled staff from overseas, they need to pay for lodging, labour, work permits, many, many things, which makes the product more highly priced.
“Another one is, I think, the energy levels… this is another area that the governments should look into this because our energy costs for investors is still high. The [last one] that we should look into is logistic. Energy and logistics are linked, and I think our logistics is still the highest [cost], and it is still fragmented, not integrated,” he concluded.