Page 22 - Insurance Times August 2020

environment regulated by government. Till few years ago, companies emerged as the market leaders in terms of
private insurance companies and other foreign insurance written premiums and performance graded by IBRB. These
companies were not allowed to transact direct insurance were Aung ThitsarOo Insurance, First National Insurance,
business. Grand Guardian Insurance and IKBZ Insurance.

When Myanmar got independence in 1948, many foreign Just 0.01% people amounting to premium of US$13 million
insurance companies were into insurance business. In 1950, have life insurance. While third-party insurance is mandatory
the Burma National Insurance Company which later for vehicles, only 10 percent of the country's roughly
became Myanma Insurance was founded. The market for 600,000 cars had any additional cover in 2016. A country
foreign and private firms slowly withered. Under the 1959 having population of around 54.34 million it is estimated that
Life Prohibition Act, life insurance companies were forbidden only 2 million people have any kind of insurance cover.
to operate a new business. Also, the Compulsory
Reinsurance Act in 1961 made the compulsory cession of The total number of insured rose from 4.2 million in June
30% of non-life insurance business to Union Insurance Board. 2018 to 4.9 million in June 2019. The value of insurance
premiums from private sector insurers stands at 0.1 percent
In 1963 foreign insurance companies were nationalised. By
of GDP, or kyat 32 billion, which grew by 40 percent (YoY) in
late 1980s, the insurance system entirely monopolised under Q3 2018/19. Contribution of Life insurance premium accounts
the State-Owned Economic Enterprises Law. The Insurance for 31% and property insurance have participation of
Business law and the Insurance Business Rules were codified approx. 55% of the insurance market. The utilisation of
in 1996 and in 1997. The Insurance Business Regulatory
insurance services remains relatively modest, and has
Board (IBRB), a body under the Ministry of Finance and
considerable scope for further growth. Distribution channels
Revenue was established in accordance with the provisions always play pivotal role in development of insurance
of Insurance Business Law, 1996 in 2011 which later on
business. Individual agents the only channel presently
reorganised on 14 Jun 2016. The chairman of the IBRB is
available in Myanmar, the growth of other distribution
Deputy Minister.
channels like brokers, corporate agents and banc-assurance
need to be developed on priority basis which will help to
Insurance was opened up to local private operators in 2012.
grow insurance market. Myanmar has signed a
Twelve private insurers were granted in-principle licenses by
Myanmar Insurance Business Regulatory Board (IBRB) in Memorandum of Understanding (MoU) with Indian
September 2012. Five insurers officially launched and begun Insurance Institute of India (III) to extend support &
their operations in June 2013. Although private companies insurance knowledge in the country.
were allowed to transact insurance business for limited lines
of business and around 12 insurance segments were allowed Opening of insurance sector will lead to fierce competition
to Myanma Insurance. After insurance sector liberalisation, but simultaneously add experience, professional knowledge
the insurance sector has witnessed consistent growth and in domain to insurance industry. Insurance industry of the
by the end of 1st financial year, 31 March 2014, four country is poised to grow mainly due to youth population,
increasing middle class, rapid urbanisation and improving
economic conditions of the country.

Insurance industry needs time to grow and imminent
challenges like requirement of robust regulatory framework,
public awareness, insurance industry association need early
resolution and support from the government. The insurance
market will take time to grow with opening up to foreign
players. But The local players also need time to build their
infrastructures, capabilities and human capital before they
face foreign competition or jump onto the joint-venture
bandwagon. Insurance in any country is supplemental to
growth of the country.

22 The Insurance Times, August 2020