Interview: Daw Sandar Oo

What structural changes can we expect to see resulting from a liberalised market?

DAW SANDAR OO: The regulator’s objective is to create healthy competition for all parties, ultimately benefiting the Myanmar people. With a liberalised insurance market, the choice of products increases and policy prices decrease. At the same time, the regulator is focusing on the sustainability of local players. With the introduction of foreign insurers, local companies will have the opportunity to work with them, resulting in a transfer of technology and expertise that will push the sector’s development. Unlike before, insurance products will also be liberalised. Restricted products will be allowed for private firms and the Insurance Business Regulatory Board will be responsible for granting the approval to launch them, which is certainly a step in the right direction for our industry.

The association will be the bridge between the players and the regulators, supporting a more prosperous dialogue between the stakeholders of the insurance market. Through this channel, we will push for more secured products and financial education for insurance holders. Myanmar’s insurance penetration is very low, with only a 0.07% share of GDP, and the insurance density is close to $1. We have a huge untapped market; foreign firms will benefit from entering it. The ultimate gain will be the increase in our national income with the growth of investors bringing foreign exchange. If they compete in our market, our general insurance premiums will go up and it will also create jobs.

How will Myanma Insurance fit into Myanmar’s newly competitive industry?

SANDAR OO: Until 2012 we monopolised the country as a state-run entity that offered 46 kinds of products. In 2013 the former administration allowed private companies to be created and to compete against our state-run enterprise. With a fully liberalised market, every entity will have to invest and push the market further, even us. Similar to local private insurers, we will compete against foreign firms. Our biggest challenge is increasing the salaries of our employees to align with those offered by private firms. The law’s provisions are improving, and we are providing benefits programmes for our staff, which include bonuses. In addition, we have been providing facilities and incentives for potential ventures with foreign or local firms.

What are the challenges of inviting international firms to participate in joint ventures (JVs)?

SANDAR OO: The government will push for inclusive development of the sector and the regulator has drafted a comprehensive roadmap. The local insurers want JVs and foreign ones want a full ownership structure. In the end, having JVs will depend on the jurisdiction and the economy of scale. The main challenge for local firms is implementing international practices and pushing governance, which has proven both difficult and expensive; another reason why investors would be welcomed. Also, the limit of equity and the capital requirement in the country are quite low when compared to the rest of the region; currently, the minimum capital required for a life insurance business is MMK6bn ($4.6m) compared to BT500m ($14.3m) in Thailand or VND1trn ($44.3m) in Vietnam.

Given the penetration rate of 0.07%, which segments are expected to be most profitable?

SANDAR OO: All segments will grow. However, every company will have to conduct a survey to determine the potential breakdown between life and non-life products. The lack of awareness in the country is a challenge for the insurance industry’s expansion. We have a plan supported by the Asian Development Bank to provide education through financial literacy campaigns, tailored for banking and insurance products. The private insurance companies are also trying hard to collaborate with regulators to educate the market.