Interview: D. Bolormaa
How has compulsory insurance increased awareness of products amongst the general population? What more can be done to raise awareness?
D. BOLORMAA: As a rule, government decisions and policies that support insurance firms have a significant effect on the industry. It has been observed that the insurance industry of Mongolia has a tendency to prosper in connection with the growth of national production capacity and mining industries, as well as other businesses that emerge following these industries, because of their demands and needs.
In Mongolia the government and the public are now faced with the need to insure themselves as a result of regulatory changes and reforms. In addition to compulsory driver’s liability insurance and attorney’s liability insurance, other types of insurance should also be considered – including professional indemnity insurance, product liability insurance, construction liability insurance and condo-owner insurance, as well as passenger and transporters’ liability insurance. Companies and individual citizens are now recognising the need for such insurances.
Furthermore, I think that the future of the insurance industry will be influenced by how quickly citizens gain knowledge about insurance. In order to be educated on the topic, the entire population should be involved in insurance relations. In this regard, the insurance policies made mandatory for the public will play an important role in bringing the sector closer to the public and increasing understanding.
What role can foreign insurers play in helping local firms build capacity in the sector? What role do they now play with respect to reinsurance?
BOLORMAA: Reinsurance plays an important role in the insurance sector, especially in developing countries, and the Mongolian insurance market is an example of this. The capacity of local insurance firms is very limited compared to foreign insurance companies. To provide insurance products for large-scale risks that actually exceed their own capacities, first and foremost, local insurance companies collaborate with experienced foreign reinsurance firms and transfer large risks to them. So, the reinsurance process happens as follows: reinsurance occurs when multiple insurance firms share risk by purchasing policies from other insurers to limit the total loss the original insurer would experience in a disaster. By sharing risk coverage, an insurance firm can take on clients whose coverage would be too great a burden for the single insurer to handle alone.
Foreign insurance companies have contributed a great deal to the domestic insurance sector. They have helped achieve increased financial capacities by generating additional revenues from foreign markets, improving asset management, avoiding excessive risks, attracting new clients with local resources, exchanging professional experience with domestic insurers and providing technical assistance. I think that it is very praiseworthy that most firms operating in the Mongolian insurance market are expanding their operations by collaborating with large foreign reinsurance companies and reputable brokers.
In what product areas do you foresee offering the most opportunities going forward?
BOLORMAA: Since insurance was first established, the possible risks to life have been increasing. In our market, new types of liability and financial insurance are emerging in connection with greater foreign investment flows into the mining industry. International practices show that insurance products for the mining industry develop rapidly, which is understandable. In a small-scale market the health insurance system is usually slow to develop, but global trends indicate that health insurance services that meet international standards are becoming more accessible. This depends on living standards, which are high enough in Mongolia that we have been introducing comprehensive health insurance services.
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