The Myanmar insurance industry dates back to the mid- to late-1800s, when the country hosted over 100 insurance companies, mostly foreign owned. World War II, however, brought all services to a screeching halt.
Then, in the late 1940s, Myanmar’s insurance sector came back to life; it was nationalized in 1952, and it later became known as Myanma Insurance in 1989.
It would take another 24 years before the industry would open up to private companies, which happened in 2013.
Despite having some history with insurance, and having 11 local companies currently providing insurance, very few people in Myanmar are familiar with the concept.
This is why Myanmar has been described as “the next big thing,” and there is huge optimism from global players in the insurance market. Many companies have had representative offices in Myanmar to conduct marketing and other non-transactional operations, and to monitor the progress and change of the industry, while awaiting for the day that foreign companies will be allowed to operate in an official capacity.
With the recent news from the government that they will allow foreign insurance companies in the local market, some local investors have already partnered with foreign insurers, while other local companies are stepping into the industry for the first time with new products and restructured services.
The government made the decision to allow foreign companies into the market earlier this year. They approved five wholly foreign-owned entities to provide life and health insurance. They also approved six joint ventures to provide life and general insurance policies; five between local and Japanese investors, and one between local and Thai investors.
AIA was one of the five wholly-owned foreign insurance companies given approval to start offering their services. Myanmar Business Today met with Mr. Luc (Nhon Ly), Chief Executive Officer of Hong Kong based AIA Company Limited, to talk about the recent developments in Myanmar.
This year marks the one-hundred year anniversary of AIA, which started its journey in 1919 based out of Shanghai. They are now operating in 18 markets in the Asia-Pacific region, include Asia, Australia and New Zealand. Based on that resume, Mr. Luc (Nhon Ly) said: “AIA will contribute as much as we can to grow Myanmar’s life insurance industry with its extensive experience.”
When asked how AIA will introduce their products and services into the Myanmar market, Mr. Luc (Nhon Ly) explained: “There are many things we want to introduce to the people of Myanmar. I think the key thing is that we want to have propositions that are innovative, flexible, and tailored for the different needs of the people of Myanmar.”
The Myanmar insurance sector is quite unique. According to a survey, only 0.1 percent of the 53 million people in Myanmar have insurance—this is very low. However, analysts say the market is steadily expanding. Likewise, a Myanmar Insurance Association’s newsletter estimated that the percentage of people with insurance will reach 2.5 percent by 2030.
The huge potential ahead will require a combined effort between insurers and regulators to raise awareness about the importance of life insurance and its benefits. With more insurers in the market, and with diverse backgrounds, Myanmar’s life insurance industry is set to go through an accelerated growth phase with a variety of products and services.
A shortage of skilled labor might be a challenge for many companies, but Mr. Luc (Nhon Ly) thinks otherwise. He said: “You can look at this as an opportunity, not as a challenge. If some people lack experience, then it probably means they have an open mind. We can share our experience, and then they can learn about the industry and start doing things very quickly. You sometimes see startup companies that are doing well, and they are made up of all young people with minimal experience. They have the potential to do an amazing job—no problem.”
AIA has been in the country for six years and is aiming to start providing services this year. Mr. Luc (Nhon Ly) said: “We hope to receive the license in the coming weeks.” The company is set to provide both life and health insurance, but they are working closely with the regulators to design new and tailored products.
“In every market we’re in, we work with the regulators to come up with the framework to develop the industry and to have the best products available for our customers. Everything in Myanmar is still new but progressing quickly, so things will change and regulations will evolve with it. As we help people to understand more about life insurance, we will have a stronger industry,” he added.
People in Myanmar are more familiar with vehicle insurance than other types of coverage. It’s a youthful country, so perhaps it’s simply easier for them to find the value in auto insurance over life insurance, health insurance, or home owners insurance.
Companies like AIA know what people want and need, and they have the technology to easily reach customers nationwide. One way they can reach people is through online sales, and this can be an advantage for companies that can effectively deploy it.
A Liberalized insurance market in Myanmar is just starting out, and there is a lot of work to be done, but Mr. Luc (Nhon Ly) explained: “If there are more insurers in the market, then there will be more of us to help build the life insurance industry here. We each have our strengths, and we can provide multiple options in the market. The more players there are, the more options there will be to offer the people of Myanmar, and that will help the industry to grow quickly,” he said.
“We are working to make our presence known in the market, and you will see the AIA sign this month. Our office and logo will be in Junction City,” he said.
Mr. Luc (Nhon Ly) estimates that Myanmar’s insurance industry will grow significantly in the next five years. We are certainly eager to see how the insurance industry grows and how companies like AIA contribute, not only to the insurance market, but also the economy as a whole.