Jurisdiction - Myanmar
Reports and Analysis
Myanmar – Insurance Update: Market Opening Expected In “One To Two Years”.

27 November, 2013

 

Legal News & Analysis – Asia Pacific – Myanmar

 

New Domestic Insurers Need 1-2 Years To Grow

 

Deputy Minister H.E. Dr. Maung Maung Thein advised that, while foreign insurers can expect the Myanmar market to stay closed to them in the near term, the prospect for market opening lies not too far off in the future. 

 

Describing Myanmar’s new domestic holders of 12 recently-issued insurance licenses as “babies, only two or three months old”, he revealed that the Government will “nurture them for one to two years” before foreign entrants will be allowed.

 

Strategic Alliances Already Allowed

 

Dr Thein confirmed that foreign insurers are already allowed to enter into strategic alliances with local insurers to provide for matters such as training and consultation, anticipating the day when joint ventures will be allowed. Insurance Business Supervisory Board (IBSB) approval must be obtained through the Ministry of Finance.

 

State Reinsurer Under Consideration

 

Dr Thein also revealed that the Ministry of Finance is considering plans to establish a stand-alone State-owned reinsurance unit providing capacity to all of the 12 new license holders. 

 

The Ministry is evaluating a policy of 30% compulsory reinsurance to this State reinsurer, with the domestic insurers free to place the 70% balance with foreign insurers. 

 

Acknowledging that this State reinsurer would take time to establish, Dr Thein also discussed the possibility that Myanma Insurance (historically the country’s only insurer) will enter into a new treaty with the 12 domestic insurers, again with 30% compulsory cession to Myanma Insurance and the 70% balance placed with foreign insurers.

 

The Need For Nurturing

 

Dr Thein noted that the 12 new license holders are too inexperienced in all matters insurance related for the Government to permit them to immediately access the private reinsurance market. 

 

Dr Thien, by training a lawyer with an insurance background, asked to convey his Government’s message of encouragement to foreign companies seeking to build relationships with their local counterparts, a process he suggested is more advanced in the insurance sector than many other sectors.

 

Dr Thein noted that insurance liberalization is one of the country’s recent successes, along with the establishment of an independent central bank and exchange rate unification. As an experienced insurance lawyer, he recognizes that domestic insurers will benefit from policies that balance nurturing by Government with progressive engagement with foreign insurers to access their experience.

 

Clyde & Co

 

For further information, please contact:

 

Michael Horn, Partner, Clyde & Co
michael.horn@clydeco.com

 

Ian Stewart, Partner, Clyde & Co
ian.stewart@clydeco.com

 

Comments are closed.