Myanmar is all set to open up its insurance sector.
Up to three foreign life insurance companies, that will be allowed to operate under a 100 per cent investment scheme, will receive a provisional licence by the end of March 2019 and they will likely start operations by July, said Thant Sin, director general of the financial regulatory department under the Ministry of Finance and Planning.
The provisional licence is aimed to create a “level playing field” for the foreign companies to enter the market with the local companies, said Thant Sin.
The opening up of the insurance sector is expected to contribute to overall economic development as also of the non-banking financial services sector.
At least five joint ventures specialising in the life and non-life insurance space are expected to enter the market, with local companies holding majority stake, according to Thaung Han, secretary of the Myanmar Insurance Association.
About four local life insurance companies are undergoing talks for a possible joint venture while up to three local non-life insurers are working on possible JVs with foreign players.
“Welcoming foreign insurance companies to operate in Myanmar will create a short-term benefit of an increased awareness about the insurance sector among the public. The market will also experience other immediate benefits like a more developed distribution channel for insurance, increased training for agents, and a possible growth of insurance products,” said Thaung Han during an interaction with DEALSTREETASIA.
Despite the steps by the government, the sector will take at least a year or two to see market traction, said Thaung Han, managing director of Citizen Business Insurance Public Ltd (CB Insurance), a life insurance provider, established by CB Group.
CB Insurance is currently undergoing joint venture talks with two Thai insurers. CB Insurance has been operating in Myanmar since 2012, and currently providing products like public life insurance plan, government employees life insurance plan, athletes’ life insurance plan, among others.
Participation from global players
Market observers predict that AIA Co Ltd, a pan-Asian life insurance company with a presence in 18 markets across Asia Pacific, and Dai-Ichi Life Holdings Inc, a leading life insurer from Japan, are likely to get a licence under the 100 per cent investment scheme.
Per the government announcement, foreign insurance companies are allowed to operate as life insurers as well as non-life insurance companies. In life sector, the ministry will allow no more than three licences for foreign life insurers as 100 per cent wholly owned subsidiaries.
Foreign life insurance companies with representative offices in the country can choose to form a joint venture with local life insurers.
Meanwhile, foreign non-life insurers will also be permitted to operate as a joint venture with local non-life insurers. For setting up joint venture companies, local and foreign insurers are advised to submit their expressions of interest (EoI).
Since 2013, the government has granted 11 insurance licences to local insurance companies after decades of monopoly by the state-run Myanma Insurance.
Currently there are 32 representative offices of foreign insurance companies, 11 local insurance companies and state-owed Myanma Insurance operating in the country.
It took six years before the government announced a significant change by allowing subsidiaries of the foreign insurers to operate in Myanmar.
Until now, foreign insurers are not allowed to sell products with an exception to Tokio Marine & Nichido Fire Co Ltd, Sompo Japan Nipponkoa and Mitsui Sumitomo Insurance which are providing insurance coverage at the Thilawa Economic Zone since 2015.