Myanmar has opened its door to foreign insurers, though in a restricted manner but this has enthused the insurance market worldwide which sees huge opportunity in this last frontier economy. We speak to Dr Maung Maung Thein*, Deputy Minister, Ministry of Finance and also Chairman of the Insurance Business Regulatory Board who was instrumental in initiating the liberalisation process in the financial services sector in the country.
By Jimmy John
Q: It was reported that Myanmar’s fledgling insurance market has grown about 40% since it was opened in 2013 and there was an estimate that the local insurers are averaging about MMK12 billion of premium annually. Is this correct and what is the country’s total premium income in 2015?
Myanmar insurance market has been growing since its inception in 2013 and has the average growth of 12% to 13% every year. General insurance companies have bigger growth and we have four big GI companies earning more than MMK1 billion (US$836,000) in gross premium income, equivalent to MMK12 billion in average. The figures for 2015-2016 fiscal year are not available yet since our fiscal year ends on 31st April.
Q: Apart from low penetration, what are some of the other challenges facing the Myanmar insurance industry?
Low penetration is the partial result of lack of insurance awareness which is a challenge to the industry. Supply chain is another challenge. Apart from the state owned Myanma Insurance, IKBZ has the most branches totalling over 30 throughout the country whereas other private insurance companies have just a few.
Q: Is online/mobile the way forward to increase awareness and penetration? Are there other alternative distribution channels that the industry is focussing on?
I believe online and mobile will pave the way forward to spread insurance services in the country. Currently we have an insurance company in the market which is making preparations to launch online services.
Q: The government has been cautious with the issuance of licences to foreign players, with only three Japanese insurers granted temporary licences in the SEZ so far. Is the industry ready for the entry of more foreign players?
Yes, the industry being three years old is ready to a certain degree for the entry of foreign insurers in a restricted way, as was the case with the 3 Japanese insurers.
Q: Which are some of the regulations you are planning to bring in for the industry in the immediate future?
I have resigned from the Chair of Insurance Business Regulatory Board (IBRB) effective 1st of May 2016. During my tenure we amended the Insurance Business Law enacted in 1996. It was a minor amendment as we just separated the State-owned Myanma Insurance from the IBRB. We also issued regulations allowing private insurers to launch and develop new products which is necessary in my view for the economic development of the country. These were my initiatives during my final days at the IBRB. The present Government is also keen to develop the market and I believe total liberalisation will happen soon.
Q: How do you see the future of the insurance industry in Myanmar?
The future is bright because we have just opened the market and there are huge opportunities for development of the insurance sector. Ours is not a congested market and we have huge economic potential. So the future is certainly bright and sunny.
*Note: Dr Thein has resigned from his post from 1 May 2016 and this interview was done prior to his stepping down.