In a major reforms move, Myanmar has allowed five foreign companies to operate life insurance business in the frontier country, according to an announcement.
The Ministry of Planning and Finance (MoPF) of Myanmar has decided to award Preferred Applicants Foreign Life Insurance Licences to Japan’s Dai-ichi Life Insurance Company Limited, Manufacturers Life Insurance Company Canada, AIA Company Limited, Chubb Tempest Reinsurance Limited from Bermuda; and Prudential Hong Kong Limited, a member of the Prudential plc from the U.K.
AIA is a subsidiary of pan-Asian life insurance group AIA Group Limited. The foreign insurers will be operating in Myanmar as 100 per cent wholly-owned subsidiaries [of the parent companies] once they are granted the licence.
The companies will have to comply with pre-licensing conditions stipulated by MoPF before being granted the Preferred Applicants Foreign Life Insurance Licences.
The foreign companies will be competing with three local companies that focus on providing life insurance and nine local private insurers that are approved for composite insurance (both life and general).
Meanwhile, there is also the microinsurance service available in Myanmar. Swiss insurtech firm Stonestep AG, that is aiming to expand across Asian countries in 2019, is preparing to offer more micro-insurance products in Myanmar.
Nic Nicandrou, chief executive, Prudential Corporation Asia, said, in a statement, the continued expansion and liberalisation of Myanmar’s life insurance sector is expected to bring significant benefits to the country.
It could take about six months for the foreign insurers to prepare before getting the licences, said Thaung Han, secretary, Myanmar Insurance Association.
Han, who is also the managing director of CB Securities, is optimistic about more players joining the life insurance market. CB Insurance, which offers life insurance, is planning to form a joint venture with Thai Life Insurance to boost business development.
Local firms like CB Insurance currently offer public life insurance plan, government employees life insurance plan, athletes life insurance plan, among others.
Opening up the insurance sector has been initiated since 2013 when the government granted 11 licenses to local companies. In October 2017, the Myanmar Insurance Association was formed with state-owned Myanma Insurance and private companies as members.
The association, which is operating through six committees, is helping out local insurers with product development.
Currently there are about 21 foreign insurance companies that are allowed to operate in the country by opening up representative offices, out of which three companies from Japan are allowed to operate only in the Thilawa Special Economic Zone.
According to a report published in 2017 by risk management firm Aon Inpoint, Myanmar’s insurance penetration is very low compared to other developing markets in Asia, with 0.01 per cent of GDP for life and 0.07 per cent of GDP for non-life in 2015. It also estimates that Myanmar’s non-life insurance market could potentially reach $0.14 billion over the next 15 years and the life market at $0.9 billion.