Insurance Market in Myanmar

By U AC

Myanmar’s insurance market was opened up from 2013 onwards. Since then, the market has grown albeit not as much as expected. In a country where the population take-up of insurance products is less than 10 per cent, it seems surprising that the market pen­etration is taking so long.

As with insurance markets across the world, we have both life and general insurers in My­anmar, 17 and 9, respectively. In terms of ownership, there are eight local-privately owned, one SOE (State Owned Enterprises), five foreign and three joint ven­tures, for life insurance. For gen­eral insurers, there is one SOE, five locals and three joint venture companies. The product range is not limited either, with both types of insurance having over 20 different products each.

The one and only SOE insur­er covering both markets are My­anma Insurance (not ‘Myanmar’). The uniqueness of it being the only Unlimited liability insurance entity. It occupies the top position in general insurance and #2 in life insurance, probably due to the unlimited liability and gov­ernment business for the former and insuring civil servants for the latter.

Some mistaken Myanma Insurance as the regulator. The regulator for the insurance in­dustry is Insurance Business Regulatory Board (IBRB), not Myanma Insurance.

The insurance penetration in the country is very low at pres­ent. The industry development is at a very nascent stage. There are lots of potential for growth in every sector of the industry, life, health, travel, car, or other­wise. Contrasting with the mobile phone and the internet, it took less than five years for mobile and internet penetration to reach 100 per cent of the population. The insurance market is taking much longer than expected.

All entities and individuals are encouraged to buy coverage from licensed insurers within the country. Purchasing cover­age from unlicensed overseas insurers carries additional risks, especially in terms of difficulty in making claims, conflict resolu­tion and mediation through the IBRB. If one insists, companies and individuals can still purchase products from overseas insur­ers, through Myanma Insurance fronting, i.e., the SOE entity, act­ing as agent for unique products of overseas insurers, for a fee.

One of the reasons for the slow pickup of life insurance in Myanmar seems to be the soft Kyat currency. Imagine you paid 3 Kyats per month for 100,000 Kyats death coverage 40 years ago. At that time, that seemed like a good deal. Yet, assuming that the person insured is still alive today. K100,000 or less than $50, would amount to almost nothing, let alone compensate for death or funeral expenses. These figures are real and factual promotions done by Myanma Insurance forty years ago at schools, as death cover for the parents. Now we can clearly see the issue of inflation and insuring in a soft currency.

The antidote to this would be to go for life insurance of short du­ration (which in turn eliminates the crucial advantage of life insur­ance) or go for inflation-adjusted life coverage. At least, the detri­mental impacts of inflation would be somewhat mitigated.

Current Status

The market is profitable and growing at present. More and more products are being intro­duced every year. People are becoming aware of the availabil­ity of insurance products as the agents get trained and push for sales. The downside of this is that more insurance frauds are being experienced at the same time. The most common is in the car insurance sector. Even though the payout ratio is 25 per cent on average across the industry, the car insurance payout is the odd one out with more than 50 per cent payout (from the premiums collected). It is time the insurance industry starts keeping a record of insurance fraudsters so that honest policyholders do not have to subsidize the criminal actions of these few people.

Every car in Myanmar needs to have third-party liability in­surance provided by Myanma Insurance, at the time of vehicle license renewal. The cost is only around $10-$15 and the payout is only around $1,500 in the event of the death of a third party, caused by the insured motorized vehicle. Comprehensive coverage for cars only became widely available af­ter the insurance industry’s lib­eralization in 2013.

Recently the insurance mar­ket was shaken up by the an­nouncement that private insurers were no longer covering terror­ism risks. Democracy campaigns of NNCP (NUG, NLD, CRPH, PDF) terrorists finally hurting the insured public too. Instead of adjusting via increased premi­ums, private general insurances take the easy way out, of not want­ing to deal with terrorist activi­ties, which some of them probably supported initially. Those wanting coverage for terrorism, war and unrest now flocked to Myanma Insurance as their saviour.

At the end of the day, the in­dustry is still a licensed business sector and as such, expected to be profitable, at least in the long run.

Claim Disputes

Claim disputes are a rarity in Myanmar. In 2021, there are less than five handled by IBRB. Most of the disputes resulted from different interpretations of insurance terms.

More Agents and Agencies

More agents are being trained in both life and general insurance. The agents work un­der one year contract committing themselves to the insurer. The companies acting as agencies with teams of agents are likely to appear in the foreseeable fu­ture too.