Insurance Market—An Overview

The insurance industry in Cambodia is of recent origin and evolving. The pricing and risk structure of the industry is still not clearly understood and there are calls for relaxation of some of the regulatory requirements.

5.1.1. Insurance Industry Regulation

The Insurance industry in Cambodia is governed by the Insurance Law that came into force in June 2000. The Insurance Law is supplemented by the Sub-decree enacted on 22 October 2001, which prescribe the details of insurance contract.

The Law on Insurance and Sub-decree require each insurance company (life and non-life) to have registered capital in Riel at least equivalent to 5,000,000 SDR or US$ 7 million.

In 2002, the MEF took into account the relatively small size of the insurance industry and the scarcity of capital and accorded it greater flexibility in terms of capital requirement whereby the companies will be given a grace period of up to five years to comply with the capital requirements.

Terms and condition to get insurance license, the company is required to:

1. • Pay a deposit of 10% of registered capital of US$7 million into the deposit account of MEF at the National Bank of Cambodia. This is to protect the public from possible risks caused by the bankruptcy of the insurance company;

2. • Pay a deposit of 50% of registered capital of US$7 million at any account of commercial bank recognized by the National Bank of Cambodia. This deposit is considered as a solvency margin, which an insurance company is required to maintain;

Supervision of insurance companies is being carried out by the Department of Financial Industry of the MEF. The process includes collection of statistics from insurance companies, desk analysis of the data submitted, a follow-up on findings, as well as on-site inspections by the regulators.

Under the present system, companies submit complete financial statements, accompanied by an auditor's certificate, once each year. Additional statistical information is collected for interim periods.