Anyone who has walked along the banks of the Yangon River in Myanmar’s biggest city cannot fail to have been impressed by the level of industry amongst the people. Everyone seems to be doing something important, even if they are not doing whatever they are doing in the quickest possible way.
It was doubtless this level of commercial activity, coupled with the sense that the nation was finally ‘going somewhere’, that prompted a naturally-cautious group of insurers to enter the market in a significant way in recent years and throw the metaphorical dice on Myanmar’s insurance market. There are presently 24 local and foreign-funded insurance companies operating in Myanmar.
As recently as late January 2021 the national government was doing its bit to encourage the development of insurance in the country by calling for expressions of interest from citizen-owned firms to secure the one life insurance licence and one non-life insurance licence that were up for grabs. The Insurance Business Regulatory Board under the Ministry of Planning, Finance and Industry was to be the arbiter of who won the licences.
And the market itself seemed to be a hive of activity. In recent weeks Prudential Myanmar Life announced an exclusive partnership for bancassurance services with Yoma Bank after receiving regulatory approval from the national government. The deal would see the carrier’s savings and financial protection products distributed through bank branches in Yangon, Mandalay, Monywa and Pyinmana.
This followed hard on the heels of a similar arrangement that saw AIA, AYA SOMPO and AYA Bank launch a strategic bancassurance partnership in Myanmar in November 2020 that would enable life, health and general insurance solutions from AYA SOMPO and AIA Myanmar to be offered across AYA Bank’s branch network throughout the country.
Japan’s Nippon Life Insurance was also all set to start selling microinsurance plans targeting low-income customers in Asia to boost its overseas business by developing new business in other parts of Asia including Myanmar.
Kyobo Life Insurance was all set to be the first Korean life insurance company to enter the country after it received approval from the Financial Supervisory Service in June 2019 and a greenlight from Myanmar’s local financial regulators. Kyobo had been hoping to use Myanmar as a stepping stone to expand into other Asean countries.
Total foreign direct investment in the country reached a peak in 2015 at around $9.5bn with much of it coming from neighbouring Asian countries – and Japan in particular.
With all this insurance market activity it would be easy to think that the military coup that rocked the nation at the start of February this year was unexpected – but it was not.
The Aon Political Risk quarterly report released on 11 January 2021 made the point quite strongly that Myanmar’s recent elections – that were being contested by the military – meant that in the medium to long term, ethnic conflicts would remain a major political risk clouding Myanmar’s outlook and stability.
At the time of writing it is still not clear how the dice will fall. Reports suggest that tens of thousands of people have taken to the streets to protest the military takeover and the arrest of the nation’s democratically-elected leaders but with the internet ‘switched off’ and Twitter, Instagram and Facebook blocked, it is hard to get a clear picture of what is actually happening.
The US, the EU and the UN have condemned the coup while China endorsed a statement calling for those arrested to be freed and to uphold ‘democratic institutions and processes’.
Foreign insurers with much ‘skin in the game’ cannot be anything but unsettled at the sight of water cannon being used on the streets against the insurance-buying public.
For the minute, it’s just a question of wait and see.
Asia Insurance Review