holocene years have seen Myanmar ’ s policy sector take significant steps forwards, with liberalization giving wax to a number of alien insurance companies entering the market. At the same time, the country ’ s fiscal sector administration has been strengthened, while the economy has continued to grow. These developments bode well for the industry, with rising per caput incomes expected to lift premium volumes and improved regulations set to stimulate investment. indeed, with penetration rates for both life sentence and nonlife coverage relatively very humble, and a population of 53.6m as of FY 2018/19, the sector presents significant potential for expansion. furthermore, the ongoing opening up of the country ’ s economy and borrowing of external best practices is expected to support increase action and rival .

Structure & Oversight

Myanmar ’ s indemnity sector has been in a state of transition since 2012, when the first local individual companies received their licences. Until then, the marketplace had been wholly dominated by the state-owned Myanma Insurance ( MI ), following the nationalization of the industry in 1964. however, MI is silent the major provider in the sector, and continues to operate under the remit of the Ministry of Planning, Finance and Industry ( MPFI ). The MPFI was headed by U Soe Win as of December 2019. The foundations for the industry were laid out in 1996, when the area enacted the Insurance Business Law ( IBL ), enabling individual companies to apply for an indemnity license in the country, and established the Insurance Business Regulatory Board ( IBRB ). Progress was dense, however ; the beginning 12 individual insurers were issued licences to operate in 2012 .
The initiation responsible for license is the Insurance Regulation and Supervision Division ( IRSD ), a subdivision of the Financial Regulatory Department ( FRD ). The FRD – which was established in its current form in 2014 and is responsible to the MPFI – is charged under the 2015 amendment to the IBL with overseeing the liberalization of the sector and was instrumental in the constitution of the Myanmar Insurance Association ( MIA ). Launched in 2017, the MIA is tasked with strengthening cooperation between the public and individual sectors, encouraging the development of the policy market, and attracting domestic and external investment.

Market Composition

According to the most recent figures from the Myanmar Statistical Information Service ( MMSIS ), the nation had 11 privately owned domestic indemnity firms, in addition to the state-owned MI, in 2018. There were besides 29 foreign insurers and brokerage firms that were stage in the area through representative offices. Of this figure, three Japan-based firms, namely Tokio Marine Nichido, Sompo Japan Nipponkoa Insurance and Mitsui Sumitomo Insurance, were allowed to conduct commercial enterprise immediately, although their operations were limited to the Thilawa Special Economic Zone ( SEZ ), a joint project by Myanmar and Japan located south of Yangon .
As of October 2018 the minimum capital prerequisite was MMK6bn ( $ 3.9m ) for a life policy company and MMK40bn ( $ 26.1m ) for a general indemnity party, while a composite firm was required to have a minimum of MMK46bn ( $ 30m ) to establish operations. meanwhile, extraneous insurers in the Thilawa SEZ were required to have paid-up capital of at least $ 1bn to start occupation. In summation, these firms were obliged to purchase politics Treasury bonds worth up to 30 % of their paid-up capital. however, MI is allowed to invest in shares, securities and other instruments in addition to its core indemnity action .
As a consequence of the ongoing liberalization of the policy sector, five foreign companies were granted licences to issue life indemnity policies through wholly owned subsidiaries in November 2019. These companies were prudential Hong Kong, a auxiliary of the UK ’ s Prudential ; US firm Chubb Tempest Re ; Canada ’ mho Manufacturers Life Insurance Company ; Japan ’ s Dai-ichi Life Insurance Company ; and Hong Kong ’ s AIA Company, which operates as a subordinate of the pan-Asian firm AIA Group .
meanwhile, early foreign insurers in both the life and non-life segments can only apply to operate as articulation ventures with a domestic firm, with six such arrangements approved in November 2019. Under these, the foreign partner can buy up to 35 % of the local company through the buy of newly issued shares, thereby boosting the capital of their domestic partners. Non-life policy joint ventures were drawn up between the three Japan-headquartered companies operating in the Thilawa SEZ and domestic providers AMI Insurance, Grand Guardian General and IKBZ Insurance. In the life policy segment the MPFI approved three joint ventures with local anesthetic players between Japan ’ s Nippon Life and Grand Guardian Life, Thai Life Insurance and Citizen Business Insurance, and Japan ’ sulfur Taiyo Life and Capital Life .

Investment Reform

extraneous engagement in the sector is expected to rise promote with the authorize of the new IBL, which is set to amply open up the grocery store to international policy players. The law, which was drafted in mid-2018 by the IBRB in collaboration with the IRSD, the FRD, the US Agency for International Development and Japan International Cooperation Agency, was undergoing a public consultation as of November 2019. however, the new legislation has attracted some criticism from investors. In September 2019 local media reported that the new police would exempt insurers from the prospective Competition Law, which is presently being drafted by the government. The modern Competition Law is designed to implement rigorous rules for bodied government and improve the openness of domestic markets. farther argument and amendments to the legislation are likely before implementation .
other legal reforms are besides expected. Existing regulations set a highly restrictive framework for the type and price of policy products available to consumers, with private insurers merely allowed to offer policies with the lapp premiums and limited coverage. This principle was first enacted in 2013 when private insurance firms had little know in order to better monitor early sector activity. Under the liberalization plan for the sector this is expected to change, however, with insurers set to be granted the ability to design and price their own products, though they will first have to submit plans to the IBRB for approval. This move is expected to lead to fresh product offerings that will more accurately suit the needs of Myanmar people, thus increasing insurance penetration. The FRD and the IBRB believe that opening up the commercialize in this way will besides drive further employment of individual companies .

Distribution

The ongoing reform is besides impacting distribution channels. traditionally, policy agents have played the leading character in the industry. Prior to the onset of liberalization – when MI was the only firm operating in the field – agents sold lone MI products ; however, with the possibility of the market to private policy companies, agents were able to sell an array of products from unlike firms. however, as the regulative system ensures that companies merely offer policies with the same premiums and commissions, contest was based on the relationship between the agent and the policy company .
This organization is now changing, however, with agents to be tied to finical companies in the future. Advocates of the reform suggest this will increase rival in terms of products and prices, thereby benefitting consumers. These changes will likely increase the parcel of gross written agio ( GWP ) taken by policy agencies. In 2018 agents took 25 % of GWP. however, this share is projected to rise to 45 % by 2028, driven by the growth of the tied-agent mannequin as a leave of the increasing penetration of the market by foreign insurance firms, according to a report from professional services fast EY .
Another distribution channel that is expected to emerge as a major driver of sectoral growth is bancassurance. While banks are not presently permitted to sell policy products in Myanmar, IKBZ and AMI were authorised to launch a bancassurance fly project in August 2019, and modern legislation is being developed to facilitate the development of the segment. A number of domestic insurers in the area are separate of the same holding party as fiscal institutions, and there has been a late expansion in the number and range of physical savings bank branches. “ When bancassurance receives entire regulative approval, it will become a game-changing distribution channel about immediately, ” U Thaung Han, managing director of CB Life, told OBG .

Reinsurance

For reinsurance, the segment is handled entirely by MI through contracts with locally present, foreign-owned reinsurance firms or directly with big reinsurers afield ; domestic private policy companies are unable to provide aim reinsurance. furthermore, insurers can entirely accept a maximum insured union of MMK500m ( $ 326,000 ). If customers require a reinsurance policy in excess of this, a local insurance company must spread the risk by co-insuring the excess with five other insurers – each of which must take 10 %, leaving MI with the remaining 50 %.

Size & Performance

With both GWP and penetration rates presently very low by international standards, the market has significant growth potential. According to EY, the unite value of GWP stood at $ 85m in 2018, with this projected to increase dramatically to $ 3.2bn by 2028. While Myanmar ’ s current GWP is on a equality with that of neighbouring Laos, its population is over seven times larger, at 53.4m. similarly, policy penetration rates are very humble in the country. EY estimated the penetration rate for general policy at 0.1 % of GDP in 2018 and animation insurance at 0.03 %, while the Ministry of Information put the overall penetration rate at 0.06 %, with general indemnity account for 0.05 % and life indemnity for 0.01 % .
The Myanmar policy marketplace therefore presents considerable board for expansion. In comparison, Vietnam opened its insurance market to individual sector natural process in the early on 2000s, with GWP growing to $ 5.7bn by 2018 and an overall penetration rate of 1.5 %. With Myanmar having only opened its markets to private players and foreign investors in 2012, and with the liberalization process gathering pace, diligence players have expressed confidence that a similar trajectory lies ahead for Myanmar. The expansion of the sector is set to be supported by both the nation ’ s high and free burning economic emergence, and its demographic visibility. Myanmar ’ s veridical GDP grew by 7 % in FY 2015/16, 5.9 % in FY 2016/17 and 6.8 % in FY 2017/18, according to the IMF, and there is an expanding middle classify. In terms of GWP breakdown, around 70 % was general insurance and life accounted for 30 % during FY 2016/17, with around 30 different types of indemnity products being offered .

General

prior to the approval of six joint ventures with international firms in November 2019, the nonlife market – with the exception of the Thilawa SEZ – was the preserve of MI and eight domestic private insurers, all of which were complex firms offering both life and general policies. MI offers the widest range of non-life insurance policies, with 20 in sum as of November 2019, according to the MPFI. Private non-life insurers have a more express range of policies, with eight generally on propose .
In terms of market share among private companies, the largest stakeholder in the non-life section was IKBZ, accounting for 52 % of GWP by private insurers in 2017, according to Yangon-based substantial estate advisory and inquiry firm New Asia Property. Second was Grand Guardian General, with 17 %, followed by AMI Insurance ( 11 % ) ; First National Insurance ( 9 % ) ; and Aung Thitsar Oo Insurance ( 8 % ). notably, the larger players are those that have entered joint ventures with foreign insurers. These companies are besides separate of larger holding companies or fiscal institutions : IKBZ is owned by Kanbawza Group, Grand Guardian General by Shwe Taung Group, AMI Insurance by Max Myanmar Group, First National Insurance by the Htoo Group and Aung Thitsar Oo Insurance by the Union of Myanmar Economic Holdings – one of the country ’ randomness two main military-backed conglomerates .
presently, the most significant and lucrative non-life intersection is property indemnity, which accounted for 80 % of total non-life income in FY 2017/18, according to the MIA. This class is expanding, with increased occupation activeness supporting a rise in fire and property damage coverage. The deposit sector has proven a particular blessing to the segment, both immediately through an increase in depository financial institution branches around the country and indirectly through the requirement of actual estate policy to use property as lend collateral. indeed, in November 2019 MI launched a campaign to promote property insurance among bank branches, peculiarly in areas of the area that have experienced unrest .

Motor

Third-party indebtedness ( TPL ) drive indemnity is compulsory in Myanmar, with this law being enforced by the Road Transport Administration Department. This torso besides regulates the market : setting the rates, policy coverage and the maximal sum of compensation that can be claimed, with MI serving as the exclusive retailer. According to the most recent available figures from the MMSIS, some 2.25m TPL policies were issued by MI as of 2017 .
Comprehensive drive insurance is besides available, with secret insurers active aboard MI in the market. insurance rates are well higher for this coverage, however, at around 1 % the price of the vehicle, and consumption has so far been abject. however, the sale of car indemnity products is expected to rise farther, with rates of car possession increasing quickly in holocene years. indeed, in 2018 some 18,000 new vehicles were sold in the country, over doubly adenine many as in the previous year. “ Awareness is growing quickly in the motor section, ” Daw Marlar Nyunt, managing director of Aung Thitsa Oo Insurance, told OBG. “ With its hardheaded and discernible benefits, it has proven an easier conceptual barrier to overcome for the cosmopolitan population, and the coverage is besides breaking ground for other less-tangible products. ”

Agriculture

Another segment with considerable growth potential is crop policy. With around 70 % of the area ’ s labor force employed in agriculture, Myanmar is among the top-three countries most affected by weather-related events and is particularly vulnerable to the impingement of climate change, according to a 2019 report from the UN Food and Agriculture Organisation. In 2018 domestic player Global World Insurance gained blessing for a biennial navigate plan for crop policy, with the intersection being available to farmers in the Ayeyarwady, Mandalay and Yangon regions. however, the project – which is being rolled out in collaboration with the Myanmar Rice Federation – has highlighted the need for better legislation to support the segment. Speaking to local press in April 2019 U Soe Win Thant, conductor of Global World Insurance, stated, “ We are learning that there is a need for back mechanisms such as a national cultivate policy committee, crop insurance laws and cultivate reinsurance ”. interim, MI launched a oneyear fly project in March 2019 in Pyay Township in Bago Region and Shwebo Township in Sagaing Region, offering coverage to farmers who have experienced losses due to weather-related events .

Life

The life sentence segment remains in the early stages of development in Myanmar. As a low-income country without a late history of long-run savings, awareness and consumption of life insurance products remain humble. MI is the dominant player in terms of liveliness coverage, and handles the majority of policies for military and government personnel. According to the latest figures from the MMSIS, MI issued 255,373 policies in 2017 for MMK207.9bn ( $ 135.5m ). however, there has been a steadily increase in individual sector activity in the liveliness grocery store, both from international firms and local players ( see analysis ). For model, IKBZ launched a new life sentence indemnity unit, IKBZ Life, in September 2019, allowing its joint venture with Mitsui Sumitomo Insurance to concentrate on the non-life segment.

In terms of market share, the top secret liveliness insurance company in 2017 was Capital Life Insurance, which issued policies totalling MMK74.5bn ( $ 48.6m ). This was followed by IKBZ with MMK56.7bn ( $ 37m ), Grand Guardian Life with MMK39.6bn ( $ 25.8m ) and Aung Myint Moh Min Insurance with MMK35.8bn ( $ 23.3m ). As in the general segment, the top insurers in the life market are besides depart of larger holding companies. Capital Life Insurance is part of the Capital Diamond Star Group, while Aung Myint Moh Min Insurance is part of the area ’ s other large military-backed conglomerate, Myanmar Economic Corporation .
As per head incomes grow and the liberalization process gathers pace, the animation policy segment is expected to expand, with one advantage being that banking deposits have abruptly time spans in Myanmar, while biography policy promises longer-term savings ( see Banking chapter ). The lack of a joint venture prerequisite for foreign life sentence insurers besides gives oversea investors much greater control over their investment once operations begin. however, for many insurers the main obstacle to growth remains a lack of public awareness and the broadly first gear level of fiscal literacy. A common mentality is that animation policy is alone for people with hazardous occupations, for model, and many citizens are not mindful of the benefits of endowments or education savings vehicles .

Outlook

Given that the sector is distillery in the early stages of development, and that the liberalization of the market is ongoing, most policy companies in Myanmar are taking a longer-term watch of the commercialize ’ mho opportunities. For the immediate future, per head incomes are set to rise, supported by gamey and hold economic growth. however, noting the fact that it is starting from a low basis, any veridical take-off of the sector will likely take longer. While the opening up of the grocery store to individual and alien investors is stimulating activity in the industry, the liberalization of prices and product differentiation – along with greater competition between private players and MI – is vital to sector development. In the interim insurers are working on boosting awareness among consumers and expanding their product offer .

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