Foreign life insurers are expected to be able to launch operations by the end of this year, a government official involved in the licensing process told Frontier Myanmar.
In April, five foreign insurers – Prudential (UK), Dai-Ichi Life (Japan), Manulife (Canada), AIA (Hong Kong) and Chubb (US) – were given approval to set up wholly owned life subsidiaries. In addition, other foreign insurers have applied for approval to set up at least four life joint ventures in which they will be allowed to hold a stake of up to 35%.
Challenges
CB Bank senior adviser U Pe Myint said with several new players entering the market at the same time, there would be fierce competition, but demand might not be as high as these companies anticipate.
“Our Myanmar cultural norms, particularly the influence of Buddhism, doesn’t really encourage the purchase of insurance,” he said. “That could be a major barrier that foreign investors will have to overcome.”
AIA chief representative Tom Renny said foreign insurers entering Myanmar need to develop products that are right for the market and then launch mass awareness programmes to educate the public about the basics, such as what life insurance is.
This process will be most important for life insurers because their products are more abstract than car or fire insurance, he told Frontier. “It’s about saving for a need, whether it’s education, retirement – you need to look at the long-term situation.”
“You’ve also got to have a distribution channel which is very well trained. They need to know their products, need to be confident to sell it, need to be able to gain the trust of customers … then, you’ve got to make the whole process easy for people to do business,” he said. A