Private insurance is still a nascent sector in Burma. Over the past two years, the government has begun to assess and approve insurers, but providers still struggle to establish themselves in the country’s fickle business climate. Adding to the difficulty is a widely held cultural belief that insurance brings bad luck.
Nyo Myint, senior managing director of KBZ Group of Companies, recently spoke with The Irrawaddy about the challenges and prospects of the insurance industry in Burma.
The government has allowed more than 10 private insurers to work in Burma over the past two years, but the industry is still quite underdeveloped. Can insurers survive in Burma current business environment?
There are 48 [types of insurance] established by the state-owned Myanma Insurance since 1962. The government has controlled everything for many years, that’s why the insurance business never really reached the public. For example, life insurance is popular in other countries. If someone has life insurance, after he or she dies, his or her next of kin will get interest; insurance companies give them money. So life insurance is very popular in other countries. Then there is non-life insurance, the second stage, such as fire insurance or car insurance. In the past, there were no competitors to Myanma Insurance, so the services were not as good as they were in other countries.
About three years ago, the government invited the private sector. The capital [required] for private companies was high, that’s why there weren’t very many applicants for licenses. There are only six companies offering life insurance and non-life insurance, out of a total of 11 companies. The rest can only do life insurance. I can say that those five that are only offering life insurance have not been successful recently, while the others are doing okay. Of non-life insurance, fire insurance tops the list, and comprehensive car insurance follows.
Of those 48 types of insurance, how many are private companies allowed to offer?
Actually, we are only allowed to offer seven. But life insurance, for instance, can mean a few different things: individual, group, sporting, snake insurance. Then there are six types of non-life insurance. Among non-life insurance, fire and car are popular, and there are others such as money transfer guarantees, savings and fatality insurance. The latter is highway travel insurance.
Travel insurance is interesting because you can get it added to your ticket for about 300 kyats (US$0.30). If a person dies while traveling, the next of kin will be compensated with about 3 million kyats. A traveler can buy extra insurance, so they can be compensated 6 million, and so on.
What types of insurance would you like to offer, but the government has not yet approved for private providers?
There are some. Marine cargo insurance, we hope that it will be allowed for us soon. Then aviation insurance. The important thing for us is re-insurance. Normally, if we have to sell a big amount, we don’t do it by ourselves; we usually work together [with other providers]. We used to work with foreign insurance companies. The government should allow this re-insurance for us as there are many foreign companies entering the country. Now we’re pushing for co-insurance. If the amount is more than 500 million kyats, six non-life insurance companies will work together with Myanma Insurance to cover it. For now that’s quite okay, but we need to develop more.
Do you expect a rise in foreign investment to improve business for insurers in the near future?
We can’t do it alone. Foreign companies are coming, that’s why we need re-insurance by the government. If we’re allowed, whatever the amount by foreign companies, we can re-insure and work with other foreign insurance companies. The thing is the government is now allowing foreign banks and special economic zones. If we’re competing with foreign firms, it will hurt us. That’s why the government needs to look out for local companies, and to protect them.
What are the biggest challenges in your field?
As I said before, the regulations for re-insurance. Another challenge is that Myanmar Insurance is both a regulator and, at the same time, an operator. [Myanma Insurance] already has many good opportunities because it has worked for so many years here. It shouldn’t be taking other opportunities.
What they say is that we have no experience, that’s why they are still controlling the sector. Now we have some experience, and it is time to allow us to use it. I hope the government will make the market fair for us in the future.
