In 2020, most industries around the world were hit by the new crown pneumonia pandemic, the market fell avalanche, the people’s livelihood and the economy were sluggish, and the Cambodian economy did not perform as expected. In the face of the cold winter in various industries, the insurance industry has performed beautifully.
In the adversity of the epidemic, the insurance market is still growing
According to the International Monetary Fund (IMF) report, Cambodia’s GDP will decline by 3.5% in 2020. The epidemic has severely hit many industries in Cambodia, but the insurance industry has grown against the trend in a severe environment. The latest information released by the Insurance Association of Cambodia pointed out that last year, Cambodia’s overall insurance premiums increased by 7.3% year-on-year to US$271.5 million. Life insurance and general insurance are the two pillars of the market, each with a market share of 56.1% and 41.9%. General insurance premium income increased by 10.5% from the previous year, reaching 113.8 million U.S. dollars. Life insurance, which accounts for the largest market share, also grew by 6.6%; compared with the previous two, micro insurance premium income fell sharply by 24.6%.
Insurance awareness is gradually rising, life insurance has become mainstream
Insurance is not yet popular in Cambodia. Most people have a negative impression of insurance, and the insurance penetration rate is only about 0.5%. Because of the booming economy and a large amount of foreign investment, the knowledge of financial management has brought about the dissemination of insurance concepts, especially life insurance with people as the main body. In the past, general insurance was the product with the largest market share in the Cambodian insurance market, and as the concept of insurance has gradually been accepted by the public, the life insurance market has also grown rapidly. Finally, in 2018, there was a critical intersection between life and general insurance, and the total premiums of life insurance surpassed that of general insurance for the first time.
The rise of insurance awareness has allowed life insurance to continue its high growth trend. Before the epidemic, total life insurance premiums grew at a rate of more than 40% every year. Even with the epidemic, there will still be a 6.6% growth in 2020.
Cambodia’s life insurance growth is better than Thailand, Vietnam, and Malaysia
Among Cambodia’s neighboring countries, Thailand and Malaysia are more mature markets for life insurance. Not only does the total annual premium income exceed 10 billion U.S. dollars, but the average annual premium per capita also exceeds 200 U.S. dollars. Although Cambodia’s market size and per capita annual premiums are still not comparable to those of Thailand and Malaysia, it is far ahead in terms of growth. From 2016 to 2019, after two years of growth in Thai life insurance, it stagnated in 2019. Malaysia is also facing a situation where growth forces are slowing down year by year. On the contrary, Cambodia has an average annual growth rate of about 50%.
The first golden period of insurance is approaching
Although the growth rate of the epidemic will drop sharply in 2020, the Cambodian people have gradually incorporated insurance into their life plans. After the epidemic, global economic activities will return to normal, and their growth momentum will return to the high growth in the past. The Cambodian insurance industry will also enter the first golden period of the industry cycle.