The Insurance Business Regulatory Board has issued requests for proposals to several international consultancies with Myanmar operations to run the liberalisation of the insurance industry, including bringing in foreign companies.
The move to allow in foreign insurers has been closely watched. It is expected to occur in tandem with industry liberalisation, though the extent of that liberalisation remains to be seen.
The Myanmar Times quoted Insurance Business Regulatory Board secretary U Zaw Naing as stating the foreign insurers may begin business by 1 October, but this is almost certainly too short a time-frame.
Opening the market has been a long time coming, though a number of domestic actors are cautious about the move.
Myanma Insurance formerly held a monopoly across the market, and still has significant influence, though 12 private companies were granted licences in 2012, with most beginning to operate shortly thereafter.
The previous Thein Sein government stated its intention to allow foreign insurers into the market at least as long ago as 2014, but dragged its feet on following through. Under the current administration in late 2016, the regulator invited private insurers and the representatives of foreign insurance companies to the capital for discussion on how liberalisation should proceed.
The result was an insurance liberalisation roadmap, which the regulator presented to the government in early 2017 — but has yet to make public.
Also in early 2017, the regulator issued foreign representative offices with updated licenses, and in March allowed foreign insurers to apply for a license to operate in Myanmar’s special economic zones. Thilawa SEZ — a joint-venture with Japan — is the only such zone operational.
Three Japanese firms — Sompo Japan Nipponkoa, Tokio Marine & Nichido Fire Insurance, and Mitsui Sumitomo Insurance — were given licenses to operate in the zone in 2015.
It is still unclear in what form operations by foreign insurers will be allowed.
Many local insurers are adamant that the best route would be to allow international firms to operate only as part of a joint-venture with local companies. They point to the fact that local firms have been kept in a regulatory straightjacket for years, unable to set their own premiums, design their own policies, purchase their own reinsurance and received little regulatory guidance or support.
Their position is that allowing direct competition with foreign companies in a market built on an outdated insurance law and insufficient regulation, would drive many local firms out of business.
Unsurprisingly, some foreign insurers would like to be able to operate in both life and general insurance without taking on a local partner. This is by no means a uniform position, however, and insurers from some regional countries are far more open to joint-ventures or even actively favour that route.
A large number of foreign companies – 27 by last count – are interested enough in Myanmar to have set up representative offices. In the previous market entry for foreign banks, have a representative office was a prerequisite for taking part in the licensing rounds.
FRD director for insurance division U Than Zin also told MFSM that there is a plan to issue license for foreign insurance brokers alongside with foreign insurers.
Separately, a parliamentary drafting committee began working on a revised law and accompanying rules and regulations around 2013, according to senior insurance executives involved in that process.
USAID, the World Bank and JICA are understood to be providing support to the government in drafting an entirely new insurance law. This law is likely to be finished after the sector is liberalised to allow foreign insurers, but will be a priority thereafter.
The Myanmar Times’ 29 August article also noted the role insurers play in the bond market. Myanmar has been keen to develop its bond market, which is currently held back by a number of issues including the lack of a secondary market and unattractive yields and tenors.