September 2018 FocusCore Myanmar published a blog with the headline “MYANMAR opens its doors to Overseas Insurance companies – contact FocusCore today”.
Now, following more work on processes to liberalise the insurance sector in Myanmar, events have led to the official Announcement No. 1/2019, 2 January 2019, by the Ministry of Planning and Finance, MOPF, entitled “Insurance Market Liberalization for Foreign Entities in Myanmar”. This is part of the Myanmar Insurance Sector Liberalization Roadmap. This announcement grants permission to companies who wish “to operate the business of insurance, underwriting agency or insurance broking with foreign investment”.
Change had become visible in 2013, when eleven licences were granted to local companies. The aim of the Government being to develop the insurance sector. Prior to 2013, the only source of insurance was via Myanma Insurance. Myanma Insurance is a state-owned insurance company, founded in 1952, a monopoly. It started as a life insurer but later broadened its scope to underwrite both life and non-life insurance.
Now, both foreign and local insurance companies are invited to submit their Expression of Interest (Eol) and/or the Request for Proposal (RfP), in order to transact insurance business in Myanmar. The announcement further states that, The Financial Regulatory Department (FRD) “will facilitate the clarifications and discussions on the Eol and/or the RfP”.
Local composite insurers are mandated by the MOPF to operate as separate life insurance and non-life insurance entities paving the way for foreign entities to associate or partner with local insurers. The licensing guidelines provide various options.
Life Insurance Companies
Option 1: Allowing not more than 3 licenses for foreign life insurers as 100% wholly owned subsidiaries;
Option 2: Allowing foreign life insurers with a life/composite representative office in Myanmar to form joint venture with local life insurers.
Non-life Insurance Companies
Allowing foreign non-life insurers with non-life/composite representative offices in Myanmar to form joint ventures with local non-life insurers. Non-life insurance has very low penetration, only 0.05% of GDP. Over 80% of the market is in fire/property insurance. These initiatives are attracting more investment from overseas. Once a licence is granted, the agreement states that the insurance company must buy Government Bonds. So further overseas capital is entering Myanmar.
FocusCore made its first investment in Myanmar in Spring 2014. Since then we have expanded our range of corporate services, helping companies across many sectors to start and operate successfully in Myanmar. Now, seeing the low penetration of insurance to date and the huge opportunity, many more will take note. This will add further benefits for risk management and another boost for the prosperity of the economy.