Interview : U Nyo Myint
How does the entry of foreign insurance companies into the market impact Myanmar?
NYO MYINT: The idea of liberalising the insurance market is a positive one, as foreign direct investment benefits the economy. However, Myanmar is a unique market that can be difficult to understand from a foreign perspective. Foreign participants in the insurance industry need to understand that Myanmar is complex, and consumer behaviour here is different compared to other markets in the region. Regarding the evolution of the domestic banking sector, experience tells us that opening the market to foreign participation will require a series of small steps and adequate legislation. In fact, foreign investors must have a local partner before they can effectively offer their services.
We are not happy with the 100% liberalisation criteria that the government is pushing forward. The market is not yet ready for this. If this scenario materialises, local companies will be unable to compete and the market will soon be dominated by foreign companies. Perhaps profits will be kept in the country for a time, but these gains will eventually leave Myanmar and we will suffer the long-term consequences of early liberalisation.
What is a feasible timeline for foreign insurers to start their operations in Myanmar?
NYO MYINT: Liberalisation needs to take place step by step. First, we should set up a proper legal framework to ensure a level playing field. Second, the government needs to grant loyal players access to reinsurance activities, since this plays a major role in maintaining a secure insurance environment. Third, the Ministry of Planning and Finance (MOPF), along with the Insurance Business Regulatory Board (IBRB), must allow foreign participation through joint ventures – and joint ventures only.
This stage would enable local players access to fair competition in a global market by learning and adopting up-to-date practices, technology and procedures. The full liberalisation should then be ready to begin.
That being said, the government has decided to move forward without heeding the warnings of local industry players, and the final criteria for liberalisation is now in the hands of a third-party consultant. After this evaluation and final decision, preparation work will take a minimum of one year. Therefore, the opening up of the market will start in the third quarter of 2019.
How will liberalisation of the market provide further development of the industry?
NYO MYINT: According to the government’s plans and the previous experiences of some of our peers in the region, liberalisation will not only bring new products into the market, but it will also develop the existing IT systems. Upgrading the current IT system will enable us to process and analyse larger amounts of data, which will ultimately have a positive impact on the efficiency and reliability of the sector. Furthermore, Myanmar’s insurance industry will have access to an expansive global network of insurers and data.
What could be done to increase penetration rates in the personal insurance market in the coming years?
NYO MYINT: Learning from the experience of neighbouring countries, increasing penetration rates in the personal insurance market will only be possible after widening Myanmar’s distribution network. When the government first permitted private participation in the insurance sector in 2013, the number of agents in the country was quite low compared to the region. As a result, we were unable to penetrate the personal insurance market as successfully as we had hoped.
The private sector and the MOPF are now focused on training insurance agents in order to increase penetration rates in the short to medium term. IBRB was conducting these training courses and the Myanmar Industries Association will soon take over. After the completion of these training programmes, we expect penetration rates to increase more than five-fold.
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