There is immense insurance potential in Myanmar, with the early-stage market having a chance to leapfrog into a favourable position learning from the experience of other countries and foreign insurers waiting with bated breath for the upcoming liberalisation of its insurance sector, discussed the ongoing 2nd Myanmar Insurance Summit, organised by Asia Insurance Review and state-owned Myanma Insurance.
Briefing the audience on the opportunities in Myanmar in the official keynote was Dr Sandar Oo, Managing Director of Myanma Insurance and Chairperson of the new Myanmar Insurance Association. General insurance is growing at 16.1% a year and life insurance at 25.3% a year, with insurance density at an estimated US$0.99537 and penetration at 0.07%.
Property is the largest class of business, representing 80.6% of total non-life premium income. The country’s Nat CAT exposures like earthquake, windstorm and flooding are currently not commonly insured, while distribution is via agents or directly with customers with no brokers. In particular for life insurance with only an estimated 0.01% of the population insured, this means there is that 99.99% market potential for foreign insurers, she said.
Currently the insurance liberalisation plan has already been approved by the Cabinet and a selection committee has been formed, which will decide on the criteria to issue licences to selected foreign underwriters, brokers and agents. The government will probably see through the plan this year, said Dr Oo. She also highlighted the important role of the Myanmar Insurance Association (MIA) which was established in January 02018 and which has signed MOUs with foreign insurance schools of India, Malaysia, Japan and Australia/New Zealand to pave the way for the MIA to work on new product development, industry capacity building, setting industry standards and best practices and increasing awareness of insurance via campaigns.
Other areas the government is considering include a guarantee fund and/or risk pool, the establishment of an insurance college, catastrophic reinsurance needs, professional associations and certification and continuing education requirements.
Role of foreign multinational insurers
Sharing the foreign insurer’s perspective and the role of life insurance in his international keynote was Mr Mark Saunders, Group Executive, Chief Strategy and Corporate Development Officer, AIA Group, Hong Kong.
Foreign multinational insurers in Myanmar could help shape the regulatory framework as they bring experience of best practices from around the world, and know what works and what has not, he said. They also accelerate local industry development through deploying significant capital at the start of operations, and help build a positive customer experience through the competition they introduce.
Given that most countries in Asia now allow 100% foreign insurer ownership or are working towards it, he noted that Myanmar is effectively competing for capital with these markets. He cautioned that foreign insurer ownership restrictions in Myanmar could reduce its attractiveness to foreign insurers, limiting the potential for additional FDI into Myanmar and the development and growth of the nation’s life insurance industry.
“Recent media speculation that 100% ownership will be offered to foreign life insurers should be commended, if that is indeed the thinking of the Myanmar government, and will be a great boost to the industry,” said Mr Saunders, elaborating on the ways 100% foreign insurer ownership would bring added benefits in capital strength, industry development, corporate governance and consumer protection.
Not too early to think about “digital disruption”
Although it may seem strange in some ways to talk about digital for such a fledgling insurance industry, the first people in Myanmar to consider insurance products are also the first populations to have a mobile phone, and will be looking to access insurance products via mobile as much as the traditional channels of agents and brokers, said Mr Philip Kent, Executive Vice President, MSIG (Asia) who spoke on dealing with tech disruptions in insurance.
Things can move very quickly in digital, he said, citing China as the classic case in point of a country which had overtaken others to be the most digital insurance market in the world. “Disruption is not a linear process. As you start with the development of a country, it doesn’t mean that you go have to go through certain stages to reach the perfect stage,” said Mr Kent.
“The opportunities here (in Myanmar) are to take the learnings for what’s happening in other markets and apply that immediately to the current environment. The combination of mobile and social networks would create a very powerful force for insurance,” he said, referring to the role of the two in having enabled the transition of industry communication with the customer from episodic (at policy inception, renewals and claims) to continuous.
The two-day Summit ends today. It was jointly organised by Asia Insurance Review and Myanma Insurance and sponsored by AIA, MSIG, Pana Harrison and supported by British Chamber of Commerce in Myanmar and the International Insurance Society.