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This presentation was delivered by Mr Mey Vann (Director at Financial Industry Department, Cambodia) at the ICMIF-AOA Development Network Seminar (18-20 September 2013; Manila, The Philippines).
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1
MINISTRY OF ECONOMY AND FINANCE
Key Issues in Licensing and Supervision of Microinsurance in Cambodia
18-20 September 2013, Makati City
KINGDOM OF CAMBODIA
Nation - Religion - King
MEY VANNDirector of Financial Industry Department
Ministry of Economy and [email protected]
2
CONTENT
A. Country OverviewB. Insurance Market In CambodiaC. Microinsurance DevelopmentD. Financial Sector Development
Strategy 2011-2020E. Key Issues in Licensing and
Supervision of MicroinsuranceFinancial Industry Department Insurance Division
3
A. Country Overview
Financial Industry Department Insurance Division
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A. Country Overview
Financial Industry Department Insurance Division
Population: 14.7M (MEF, 2013)Population in Phnom Penh: 2,009,264 Area: 181,035 sq km (69,898 sq miles)GDP: 15,191M USD(MEF, 2013) GDP per capita: 1,036 USD (MEF, 2013)
GDC Growth rate within 10 years
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A. Country Overview
Financial Industry Department Insurance Division
INTEREST RATE ON DEPOSITS ( in January 2013)
Deposit in Riel (%) Deposit in USD (%) Deposit in Other Foreign Currency (%)
Saving Fixed Saving Fixed Saving Fixed
1 M. 3 M. 6 M. 12 M. 1 M. 3 M. 6 M. 12 M. 1 M. 3 M. 6 M. 12 M.
1.13 2.46 3.3 4.06 4.86 0.81 1.85 2.5 3.25 4.04 0.58 3.31 3.08 3.33 3.65
INTEREST RATE ON LOAN ( in January, 2013)
Loan in Riel (%) Loan in USD (%) Loan in Other Foreign Currency (%)
1 M. 3 M. 6 M. 12 M. 1 M. 3 M. 6 M. 12 M. 1 M. 3 M. 6 M. 12 M.
13.95 13.95 13.95 14.26 13.34 12.37 12.87 13.05 11.75 8.72 10.38 10.41
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B. Insurance Market in Cambodia
Financial Industry Department Insurance Division
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B. Insurance Market in Cambodia
Financial Industry Department Insurance Division
2005 2006 2007 2008 2009 2010 2011 2012
Per-ne-tra-tion Rate
0.00172380645161291
0.00166720879725086
0.00202685053875565
0.00199973677082326
0.00192432057692308
0.00212781829121541
0.00233099691477054
0.00255890109577345
0.03%
0.08%
0.13%
0.18%
0.23%
0.27%
Insurance Penetration Rate 2005-2012
8Financial Industry Department
Insurance Division
B. Insurance Market in Cambodia
2005 2006 2007 2008 2009 2010 2011 2012
Premium 10847914 12128944 17493747 20671279 20012934 24755038 30221375 35962796
$2,500,000
$7,500,000
$12,500,000
$17,500,000
$22,500,000
$27,500,000
$32,500,000
$37,500,000
Premium Growth 2005-2012 in Cambodia
MicroinsuranceAug 2011
Life insuranceMay 2012
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Types of Company
General Insurer Life
InsurerReinsurer MI
NGOsPilot
SchemeBroker Agent Total
Private Company
5 2 1 6 1 3 18
Joint Venture 1 1 1
3
Total 6 3 1 1 6 1 3 21
Financial Industry Department Insurance Division
Number of insurance companies and Distribution channels as at August 2013
B. Insurance Market in Cambodia
10Financial Industry Department
Insurance Division
C. Microinsurance DevelopmentIn Cambodia
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C. Microisnurance Development
Financial Industry Department Insurance Division
There are 74% of population which live in rural area There are 70 of MFIs in Cambodia as at January 2013 which are : 37 licenses and 33 certificate (NGOs) included the C.M.K is Credit Mutuel
Loan grew from 2002 to 2010 at USD %51 millionin and USD$439 respectively. Number of MFI borrowers increased from 330,000 to 1.02million between the same period.
12Financial Industry Department
Insurance Division
THANK YOU!
CMK 2010 2011 2012
Clients 1,291 2,566 3,666
Saving (USD) 1,099,120 2,510,177 4,831,322
Credit (USD) 567,562 1,301,714 2,137,211
C. Microisnurance Development
Financial Industry Department Insurance Division
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C. Microisnurance Development
In 2011, MEF issue a temporary license related to microinurance that distinguished :
1. CBHI which is known as MHI (for non profit) : until now there are 6NGOs1- HIP/ SKY was launch in 20032-CHC was launch in 20123-Other 4NGOs ( CAAFW, BFH, RACHA, CHHRA)
2. Micro insurance in Cambodia ( for Profit) : Prevoir (PKMI) was launch since 2011
Financial Industry Department Insurance Division
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C. Microisnurance Development
Financial Industry Department Insurance Division
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C. Microisnurance Development
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$105,036 $36,911 $27,978
$436 $27,640
$105,472 $64,551
$27,978
$51,324 $20,493
$6,684
$80,096 $52,611
$100,209
$(25,948) $(8,553)
$(78,915)
Profit and Loss of MHI and Microinsurance as at June 2013
Premium Collect Other/ Donation Total Income Claim Expense Admin cost Profit / (Loss)
SKY
PREVOIR
CHCSKY
PREVOIR
CHCSKY
PREVOIR
CHC
Micro Health Insurance Microinsurance Business
Financial Industry Department Insurance Division
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D. Financial Sector Development Strategy 2011-2020
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The current insurance industry and legal frameworks are developed under the financial sector development strategy (FSDS).
The strategy were updated three times since 2001.
The recent updated strategy (FSDS 2011-2020) was issued by Royal Government of Cambodia (RGC) on November 25, 2011.
Financial Industry Department Insurance Division
D. Financial Sector Development Strategy 2011-2020
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Development Policy Area
Short -TermTarget 2011-2014
Medium -TermTarget 2014-2017
Long-TermTarget 2017-2020
Legal and regulatory framework
-Develop legal framework for life insurance and Microinsurance-licensing Life insurance and Microinsurance business.-Establish a supervisory body for microinsurance
Review insurance regulations to align with the level of market development and consideration to apply to Based Capital (RBC)
Enlarge microinsurance coverage to the need of the poor people.
Development of private voluntary pension
-Develop a legal and regulatory framework for private voluntary pension.- Establishment private pension supervisory body
- Introduction of private voluntary pension- Initiate training programs to public and private academic institutions.
Enlarge pension coverage to the need of the poor people.
Financial Industry Department Insurance Division
D. Financial Sector Development Strategy 2011-2020
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E. Key Issues in Licensing and Supervisionof Microinsurance
Financial Industry Department Insurance Division
Financial Industry Department Insurance Division
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E. Key Issues inLicensing and Supervision of Microinsurance
In 2011, MEF issue circular on Issuance of Temporary License for MicroinsuranceCondition of Temporary Licensing:1/ Microinsurer:
-Minimum paid-up Capital : 150,000USD-Deposit 50,000 with MEF-Maintained 100,000USD as solvency margin
2/ Community Based Health Insurance Implementer (CBHI)-Summit CBHI proposal scheme to MEF-Shall have enough financial resource for at least 3years project
Licensing
Financial Industry Department Insurance Division
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E. Key Issues in Licensing and Supervision of Microinsurance
All microinsurer and CBHI have to comply with :1/ Fit and Proper requirement of the Management2/ Restriction of size of a microinsurer3/ Validity of license for microinsurer: valid for 1 year from the date of issuance .
4/ Microinsurer have to summit audited financial report within 3months after the end of each fiscal year.5/ licensee shall submit statistics and insurance business report such as monthly, quarterly, semester report to MEF before 15th of each month, quarter, and semester.
Supervision
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Challenges
Inadequate legal frame work and market infrastructure Shortages of skilled workers, education and public awareness, little experiences Remains a pilot with commercial insurers and NGOs Small market where the insurance premiums account for less than 0.3% of GDP Little retail distribution low product and distribution innovation Ineffective payment systems and banking penetration Insurance tax rate Retention capacity is low
Financial Industry Department Insurance Division
E. Key issues in Licensing and Supervision of Microinsurance
Financial Industry Department Insurance Division
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E. key Issues in Licensing and Supervision of Microinsurance
WAYS FORWARD: POTENTIAL FOR REPLICATION AND IMPLEMENTAION
Insurance regulation is essential for expanding and building confidence Education and public awareness need to be addressed for both of
microinsurance and social protection Identify interventions on microinsurance and social protection Consensus and collective commitment from all concern authorities and
development partner Priority insurance products such as health and crop insurance Develop microinsurance through a sector base approach
24Financial Industry Department
Insurance Division
THANK YOU!