Myanmar opens market for foreign insurances

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Myanmar Opens Market For Foreign Insurances
Sule Pagoda in downtown Yangon

Five foreign companies have been granted provisional licenses to sell life insurance policies through subsidiaries following more than two years of delay in opening up the Myanmar insurance market.

The companies are British Prudential, Japanese Dai-ichi Life, Hong Kong’s AIA, US Chubb and Canadian Manulife. They have been authorised to establish wholly-owned life insurance subsidiaries by the ministry of planning and finance which published the list on April 5.

It marks the first time that the heavily-state-controlled economy has allowed foreign ownership in its fledgling insurance market, which was estimated to be worth only $13 million in life insurance premium revenue as of 2017.

Foreign investors have expressed frustration with multiple delays in the long promised liberalisation of Myanmar’s almost entirely closed insurance market. Insurance penetration in the country is extremely low, even compared to Cambodia, Laos and Vietnam. Non-life penetration in Myanmar in 2015 stood at 0.07 per cent and around 0.01 per cent for life, giving a market total of 0.08 per cent, according to research firm Swiss Re Sigma.

Since 2013, eleven local insurers have been granted licenses to operate in Myanmar, while 14 foreign insurers have set up 30 representative offices. But none of the latter have been allowed to do business except in Thilawa where three Japanese companies were granted permission to operate non-life insurance businesses in the special economic zone, namely Tokio Marine & Nichido Fire Insurance, Sompo Japan Nipponkoa Insurance and Mitsui Sumitomo Insurance.

The entry of well-established multinational insurers will bring a jolt of competition to a market consisting only of small local players. Dai-ichi forecasts the market to expand 100-fold to $1.3 billion in ten years. The five companies are expected to begin operating by the end of this year after completing procedures for the establishment of subsidiaries and other requirements.

The government said it will choose by May other foreign insurers allowed to form joint ventures with local providers under a 35 per cent ownership cap.

Japanese players Taiyo Life Insurance, Mitsui Sumitomo Insurance, Sompo Japan Nipponkoa Insurance and Tokio Marine & Nichido Fire Insurance are discussing terms with potential local partners. Thailand’s Muang Thai Life Assurance and Thai Life Insurance are also in talks with potential partners.

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Sule Pagoda in downtown Yangon Five foreign companies have been granted provisional licenses to sell life insurance policies through subsidiaries following more than two years of delay in opening up the Myanmar insurance market. The companies are British Prudential, Japanese Dai-ichi Life, Hong Kong’s AIA, US Chubb and Canadian Manulife. They have been authorised to establish wholly-owned life insurance subsidiaries by the ministry of planning and finance which published the list on April 5. It marks the first time that the heavily-state-controlled economy has allowed foreign ownership in its fledgling insurance market, which was estimated to be worth only $13...

Reading Time: 2 minutes

Myanmar Opens Market For Foreign Insurances
Sule Pagoda in downtown Yangon

Five foreign companies have been granted provisional licenses to sell life insurance policies through subsidiaries following more than two years of delay in opening up the Myanmar insurance market.

The companies are British Prudential, Japanese Dai-ichi Life, Hong Kong’s AIA, US Chubb and Canadian Manulife. They have been authorised to establish wholly-owned life insurance subsidiaries by the ministry of planning and finance which published the list on April 5.

It marks the first time that the heavily-state-controlled economy has allowed foreign ownership in its fledgling insurance market, which was estimated to be worth only $13 million in life insurance premium revenue as of 2017.

Foreign investors have expressed frustration with multiple delays in the long promised liberalisation of Myanmar’s almost entirely closed insurance market. Insurance penetration in the country is extremely low, even compared to Cambodia, Laos and Vietnam. Non-life penetration in Myanmar in 2015 stood at 0.07 per cent and around 0.01 per cent for life, giving a market total of 0.08 per cent, according to research firm Swiss Re Sigma.

Since 2013, eleven local insurers have been granted licenses to operate in Myanmar, while 14 foreign insurers have set up 30 representative offices. But none of the latter have been allowed to do business except in Thilawa where three Japanese companies were granted permission to operate non-life insurance businesses in the special economic zone, namely Tokio Marine & Nichido Fire Insurance, Sompo Japan Nipponkoa Insurance and Mitsui Sumitomo Insurance.

The entry of well-established multinational insurers will bring a jolt of competition to a market consisting only of small local players. Dai-ichi forecasts the market to expand 100-fold to $1.3 billion in ten years. The five companies are expected to begin operating by the end of this year after completing procedures for the establishment of subsidiaries and other requirements.

The government said it will choose by May other foreign insurers allowed to form joint ventures with local providers under a 35 per cent ownership cap.

Japanese players Taiyo Life Insurance, Mitsui Sumitomo Insurance, Sompo Japan Nipponkoa Insurance and Tokio Marine & Nichido Fire Insurance are discussing terms with potential local partners. Thailand’s Muang Thai Life Assurance and Thai Life Insurance are also in talks with potential partners.

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