Banks to play bigger role in insurance sector

Huy Vatharo, chair of the Insurance Association of Cambodia, speaking at a webinar on bancassurance functions on Thursday. Supplied

Bancassurance, or the offering of insurance products through financial institutions and banks, is expected to play an ever-increasing role in the emerging insurance sector in Cambodia, according to a group of financial executives who met virtually on Thursday.

The Association of Banks in Cambodia (ABC), the Cambodia Microfinance Association (CMA) and the Insurance Association of Cambodia (IAC) hosted the digital workshop to discuss this role and the growing interconnectedness between the financial and insurance sectors.

The aim of the workshop, which hosted over 200 attendees from the public and private sector, was to promote bancassurance, build public trust and raise public awareness of the necessity of the rapidly growing insurance sector, In Channy, chairman of the ABC said.

Kea Borann, the chair of the CMA added: “The experience among the banking and finance sector shows that the reason customers go bankrupt or default is often caused by health problems, accidents as well as natural disasters. Therefore, the contributed protection of customers through insurance products and services is pivotal to prevent and mitigate risk.”

Offering insurance services through banks provides insurance companies with a wide distribution network and the initiative has proven to be highly effective in other markets and regions in the world, chair of the IAC Huy Vatharo said.

The NBC has approved 18 banks and two microfinance institutions to offer bancassurance through referrals to existing insurance companies, according to Kith Sovannarith, the deputy director general of Banking Supervision.

On March 30, the government released a prakas which first allowed banks to start offering insurance products in an attempt to increase the public’s access to the sector.

According to the prakas, banks and financial institutions can apply for a referral model or corporate agency model.

In the referral model, the institutions refer customers to an insurance company whereas in the corporate agency model, a bank or financial institution can market and sell insurance products directly. Khmer Times