Foreign insurance providers are on the verge of starting their operations in Myanmar, as Ministry of Planning and Finance (MOPF) now has officially permitted companies wishing “to operate the business of insurance, underwriting agency or insurance broking with foreign investment” to open for business in the country.
The MOPF’s announcement No 1/2019 es invites interested local and foreign insurers to submit Expressions of Interest and/or Requests for Proposals to operate insurance businesses in Myanmar.
The process will be facilitated by the Financial Regulatory Department.
According to the announcement, life insurance providers will be given two options to operate. The first option allows not more than three licenses for foreign life insurers to operate as 100 percent wholly owned subsidiaries. The second allows foreign life insurers with a representative office in Myanmar to form a joint venture with a local life insurer.
The non-life insurance providers with rep offices in Myanmar will be allowed to form a JV with local non-life insurers.
Local composite insurers are to operate as separate entities, which will pave a way for foreign entities to associate or partner with the local insurers.
“Liberalising is better the local companies will benefit from foreign know-how and skills and develop further,” U Thaung Han, secretary of Myanmar Insurance Association, told The Myanmar Times in December.
Two large Indian state owned insurers, The New India Assurance, country's largest non-life company and the Life Insurance Corporation(LIC), are keen to set up their operations in Myanmar.
Daw Sandar Oo, managing director of State-owned Myanma Insurance, said foreign insurance providers are keen to expand in Myanmar given that only 2 million out of a population of more than 50 million are insured. In Myanmar, insurance penetration is still just under 0.1pc of GDP, the lowest in this region.
According to the CBM, total gross written premiums (GWP) amounted to approximately K33.9 billion in the first quarter of 2017, with Myanmar Insurance accounting for 45.5pc of the total.
Currently, fire insurance, motor insurance, group life insurance, special travel insurance, health insurance and marine cargo insurance are the more popular policies in Myanmar, according to Global World Insurance.
The move is also significant for the capital market, as insurance providers are big investors in government bonds.
U Thant Sin, director of the Financial Regulatory Department under the MOPF, said foreign insurers can be expected to contribute to capital towards buying government bonds.
“If we allow foreign players in the market, we will be able to get the funds we need to develop the government bond market. Once an insurance company is given alicence, 30pc of their required capital should be for buying government bonds,” U Thant Sin said.