Analysis: Foreign insurers enter Myanmar market with hope, caution

Wed Nov 7, 2012 3:53am EST
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By Clare Baldwin

HONG KONG (Reuters) - The world's top insurance firms are setting their sights on Myanmar, steeling themselves for a fight with corruption and ghosts from the nation's political past.

Prudential Plc (PRU.L: Quote), AIA Group Ltd 1299.HK and Manulife Financial Corp (MFC.TO: Quote) are among the global insurance giants preparing to enter Myanmar as the government rolls out a framework for the sector's development with the lifting of European and U.S. sanctions.

The opportunities are many. A large population, economic reforms and a natural resources industry could combine to create rising wealth among Myanmar's people. There is also money to be made by general insurers providing cover for the impending boom in construction projects.

"A few years ago everybody needed to have a China story and India as well," said Michael Daly, a director and consulting actuary for the China and Southeast Asia life insurance practice at Milliman Inc. "Now the attention has shifted to Southeast Asia."

Myanmar could produce $1.6 billion in annual premium revenues, according to Reuters calculations based on economic data and comparisons with neighboring markets. That would less than 10 percent of what Singapore premiums bring in now, but in line with Vietnam's current insurance market.

With the opportunities come obstacles, including new rules governing foreign insurers that are yet to be tested.

In addition, the country's one sole established insurer - state-backed Myanma Insurance - is guaranteed certain contracts, effectively closing off portions of the market.

Other challenges include competition from a handful of regional players and corruption.   Continued...