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Myanmar opening for business as government moves to liberalise local insurance market, says Axco
17 January 2017
Axco Insurance Information Services (Axco) has released its
latest non-life country report on Myanmar. In 2016, the
Ministry of Finance and Planning in Myanmar announced further plans
to liberalise the insurance market, allowing foreign players into
market. The government first opened up the insurance market to
domestic and international insurers in 2012, breaking the monopoly
held by state-owned Myanma Insurance.
Axco reports that at present, insurers can only compete on the
basis of service to agents or clients, as Myanma Insurance controls
rating, policy terms and conditions, and commissions. Additionally,
independent companies can only underwrite certain classes.
The non-life market consists of Myanma Insurance and 12
independent and locally owned insurers, nine of which have
composite licences although only six actively compete with Myanma
Insurance for non-life classes.
Insurers are not allowed to buy reinsurance and are limited to
accepting a maximum sum insured of MMK 500mn (c. USD 400,000). For
clients who need a policy in excess of that limit, a local company
must co-insure the excess with the other five insurers, at 10%
each, and Myanma Insurance, which takes the remaining 50%.
Although there are no official figures produced, Axco sources
estimate the non-life market in 2014 to be worth around MMK
34,500mn (c. USD 25mn), 94% of the country's total insurance
market. The non-life insurance market has low levels of penetration
and market premium is just 0.05% of GDP, with per capita spend
below one US dollar. The market is dominated by fire (property)
risks at over 80% market share.
There is however, opportunity for non-life insurance penetration
to increase. There is growing appetite from Myanmar's burgeoning
middle class; those earning in excess of USD 500 per month.
Myanmar's economic development has led an influx of local people
into the formal labour market, providing them with a regular
Since the programme of liberalisation began, a number of
international non-life insurers have established representative
offices, including Mitsui Sumitomo, Sompo and Tokio Marine &
Nichido Fire Insurance. However, these regional offices look after
the local interests of their group clients and place any business
through Myanma Insurance as a fronting company. Since they are not
licensed, they are not allowed to market their products or conduct
business in Myanmar. It is expected that the number of such
representative offices will increase in future.
Tim Yeates, Managing Director at Axco,
"Myanmar's government is attempting to attract foreign companies
into the local insurance market through a process of gradual
liberalisation. Although there is still a long way to go before
foreign companies can progress beyond representative offices, the
growing middle class could provide a future customer base. "With
such low insurance penetration, there is opportunity for foreign
capital to enter the market and compete with local players, though
an understanding of the local market will be essential."
For further information please contact Axco