Prior to the outbreak of Covid-19, Myanmar's insurance sector was going through a period of rapid change following the entry of foreign insurers in 2019. Amid the disruptive environment of the pandemic, the fledgling insurance industry has continued to develop new distribution channels and services in response to shifting demands from the market.
The country’s penetration levels are among the lowest in the world, with some analyses estimating that as few as 4% of the population have coverage. For several years authorities have been moving to capitalise on the considerable investment potential in this largely untapped market.
As part of broader efforts to liberalise the country’s financial services, in 2017 the government announced it was opening the insurance sector to foreign players, in a bid to expand coverage and raise competitiveness.
At the end of 2019, following a prolonged period of policy deliberation, the Financial Regulatory Department licensed five fully-foreign insurers and six joint-ventures to operate life insurance businesses in the country.
The five parent companies of the wholly-owned foreign entities were Prudential Hong Kong, a subsidiary of the UK’s Prudential; the US’ Chubb Tempest Re; Canada’s Manufacturers Life Insurance Company; Japan’s Dai-ichi Life Insurance Company; and Hong Kong’s AIA Company, a subsidiary of the pan-Asian AIA Group.
The emergence of the coronavirus pandemic soon afterwards gave rise to unexpected challenges, but these new entries to the market have responded by updating their online offerings and digital platforms to facilitate access for customers.
AIA Myanmar, for example, moved its operations online in April, as did Chubb Life Insurance Myanmar.
"The main adaptation we have made internally was to provide our sales force with the technical tools they needed to continue to promote sales electronically and no longer through traditional channels – laptops, software, VPNs and agile online contract signing tools are just a few examples," Nguyen Hong Son, country president and CEO of Chubb Life Insurance Myanmar, told OBG.
Alongside this, cutting-edge technologies are increasingly prevalent in the sector, with cloud computing services and artificial intelligence helping to improve efficiency and customer service.
"The adoption of new technologies has taken place at a dizzying speed. Not only are cloud computing services proving essential in making insurance companies' operations in Myanmar efficient, but artificial intelligence is increasingly taking the place of specialists, from customer care, to the quantification of road damage claims, to the finalisation of commercial contracts," Anil Mancham, CEO of local insurance provider KBZ MS, told OBG.
The pandemic has thus sped up an ongoing process of digital transformation – one which has been seen across the board in Myanmar, supported by the country’s post-pandemic recovery strategy.
Among the seven goals that comprise the Myanmar government’s Covid-19 Economic Relief Plan, announced in late April, is the promotion of “innovative products and platforms”. This includes encouraging the use of mobile payments and e-commerce.
In line with this, as OBG recently outlined, Myanmar has seen an increase in financial technology and digital payment offerings since the outbreak of the pandemic, with data analytics company Statistica projecting a 7.1% increase in digital transactions and a 19.7% rise in the number of users in the country this year.
This is an encouraging sign in terms of expanding financial inclusion, as banking penetration in Myanmar remains signifcantly below the regional average.
On a similar note, the increasing digitalisation of the insurance sector is expected to enable companies to reach customers who previously did not have access to insurance products. Micro-insurance – small-scale, affordable insurance products – shows considerable potential in this regard.
To take an example, domestic firm KBZ MS has invested heavily in micro-insurance by expanding its e-wallet offering in collaboration with its bank division.
Another distribution channel that is expected to emerge as a major driver of sectoral growth is bancassurance. Its expansion is also closely linked to increased digital engagement.
Until this year, banks were not permitted to sell insurance products in the country. However, on March 4 the Insurance Business Regulatory Board issued a directive stating that banks and microfinance institutions are now permitted to act as agents.
The following day, Prudential Myanmar Life Insurance – one of the new entrants – announced it had signed a partnership with Yoma Bank to distribute its products via the bank’s 80 branches around the country.
According to analysis from KBZ MS, the total bancassurance market in Myanmar could be worth some $1.3bn by 2029.
"The micro-insurance sector and bancassurance present great opportunities for development. A reform of insurance regulations could certainly facilitate this potential expansion and the growth of the industry towards unexplored opportunities," Son told OBG.
Going forwards, it is essential that the pace of regulatory reform be maintained if the sector is to continue to grow.
Industry voices are optimistic in this regard, citing the rapid progress in recent months and a demonstrated willingness from the authorities to engage with the private sector.
"Myanmar's insurance sector is one of the most interesting and vibrant sectors – with progressive, pioneering and collaborative regulators – I have encountered during my career in various industries," Zarchi Tin, CEO and Executive Director of Dai-ichi Life Insurance, told OBG.
These sentiments were echoed by Mancham, who told OBG that "the growing opportunities offered by the insurance industry in Myanmar are recognised by the government, which is working to broaden the investment options of insurance companies and to create a financial ecosystem that is conducive to domestic investment".
In an indication of the growing appeal of the sector, one of South Korea’s biggest life insurers, Kyobo Life, recently announced plans to establish a joint venture in Myanmar in the second half of 2021. It plans to set up an office by the end of this year, and is currently looking for a local partner.
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