Insurance revenues climb in first quarter

[PHNOM PENH POST]

Foreign direct investment helped to boost insurance premium revenues 27 percent in the first quarter of the year, while claims broke a multiyear trend and fell, officials said.

Total premium revenues jumped to US$6.8 million in the first quarter, up from $5.7 million in the same period of 2010, according to the General Insurance Association of Cambodia.

The biggest growth was seen in fire and miscellaneous insurance premiums, both of which rose about 29 percent, followed by motor insurance at near 25 percent.

“The rising of premium revenues is running parallel with improvements in our economy – more foreign investors are coming,” said GIAC Chairman Chhay Rattanak, estimating the insurance industry’s total revenues would advance 28 percent in 2011.

Factory owners are increasingly purchasing fire insurance, while more and more drivers are seeking out insurance for their vehicles, he said. Most motor insurance previously had been bought by businesses only, he claimed.

Forte Insurance saw its premium revenues soar 40 percent year-over-year in the first quarter thanks to the Kingdom’s resurgent real estate sector, as well as driver demand, said the firm's General Manager Youk Chamreounrith.

“We see that our premium revenue rose mainly from construction, as more activities are being done,” he said, adding property and motor insurance were also up.

“People have begun to understand the benefit of having insurance, so our motor insurance also increased a lot – 20 percent,” he said.

Youk Chamreounrith predicted Forte’s premium revenues would increase 30 percent for 2011.

Cambodia Vietnam Insurance Chief Executive Officer Cao Minh Son said his premium revenues showed a sharp increase in the first quarter, reaching $515,000 from just $85,000 in the same three months of 2010. CVI first opened its doors during the first quarter of last year.

Cao Minh Son credited aviation and some property insurance for the increase.

However, CVI’s claims also rose 34 percent year-over-year for the period, largely from motorcycle drivers, he said.

At the same time, Forte’s claims were up 30 percent, General Manager Youk Chamreounrith said.

These two numbers mark a trend over the past two years that has been a concern for the industry, said GIAC’s Chhay Rattanak.

Still, the claims paid by Cambodia’s six insurance companies fell 11 percent to just $1.3 million in the quarter, according to GIAC statistics.

Infinity Insurance Chief Executive Officer David Carter wrote that increases in the amount of health, construction and motor insurance sold generated a 10-percent gain in revenues for his company. At the same time, he said claims at his company were relatively stable.

“Claims are remaining at the same level proportionally as 2010,” he claimed, saying he expected his premium revenues to rise 20 percent this year.

Meanwhile, the June Textile factory fire in March is expected to result in a claim of between $15 and $16 million, Chhay Rattanak said last week. The garment factory in Phnom Penh’s Sen Sok district had employed some 4,000 workers, until it caught fire on March 31.

“The amount will not be a burden on the local company, as they have reinsured with a foreign partner,” he said.

Ministry of Economy and Finance Industry Division Head In Meatra had said last week Cambodia’s laws require a local company reinsure in certain cases with a partner abroad, to avoid risk and keep the industry growing.