The insurance sector in Cambodia, with a current penetration rate of 1.14 percent, stands at a crossroads of significant growth potential and notable challenges, according to Bou Chanphirou, the Insurance Regulator of Cambodia’s (IRC) Director General. The penetration rate, which reflects the ratio of total insurance premiums to the national Gross Domestic Product (GDP), reached a total of $332 million in gross premiums collected by Cambodian insurers in 2022.
Chanphirou highlighted the dual nature of the current penetration rate during a presentation at the ‘Leading the Way: The Future of Bancassurance’ event organized by AmCham Cambodia. He identified it as an indicator of the untapped market potential within the country, as well as a marker of the hurdles that need addressing to foster growth in this sector.
One of the primary obstacles identified was the general public’s lack of awareness regarding the importance of insurance, pointing to a significant need for increased educational initiatives and financial literacy campaigns. Additionally, the limited avenues available for insurance distribution were seen as a constraint that requires broadening to reach more potential policyholders.
In terms of insurance density, which assesses premium collections relative to the population size, Cambodia noted an average of $20.72 per capita in 2023. Given the crucial role of insurance in bolstering social security nets, stakeholders within the industry are advocating for innovative approaches, particularly in the realms of digitalization and insurtech, as emphasized by Em Kamnan, the National Bank of Cambodia’s (NBC) Deputy Director General of Banking Supervision.
The Cambodian government has set ambitious targets to elevate the insurance penetration rate to 5.5 percent and increase the insurance density to $135 per capita by 2030. Achieving these goals necessitates a synergistic relationship between banks and insurance providers, a skilled workforce, and a focus on customer-centric services, as stated by Ivana Tranchini, Visa Cambodia’s country manager and a member of the AmCham Board of Governors.
Furthermore, the adoption of advanced technologies, including large data analytics and generative AI, is projected to significantly enhance the operational efficiencies of insurance firms. Mohan Jayaraman, a partner at Bain & Company, highlighted the transformative potential of generative AI, estimating its ability to contribute $50-70 billion in annual economic benefits to the global insurance industry.
