Myanmar: Reinsurance will become foreign players' gateway to mart

Despite the government wishing to keep the insurance market in Myanmar closed while it develops, there are likely to be reinsurance opportunities for foreign carriers in the short to medium term, says the international law firm, Clyde & Co.

In its “Corporate Insurance – 2014 Market Predictions” report, Clyde &Co said that the domestic holders of 12 recently-issued insurance licences will be nurtured by the government for one to two years before foreign entrants will be allowed. Currently the new license holders are deemed to be too inexperienced in insurance related matters to be permitted immediate access to the private reinsurance market.

“So, it is expected that the Ministry of Finance will consider plans to establish a stand-alone state-owned reinsurer to provide capacity. It is likely that a policy of 30-percent compulsory reinsurance to this state reinsurer will be adopted, with the domestic insurers free to place the 70-percent balance with foreign insurers,” said the law firm.

Since it will take time to establish such a reinsurer, it is possible that Myanma Insurance (historically the country’s only insurer) will enter into a new treaty with the 12 domestic insurers, again with 30-percent compulsory cession to Myanma Insurance and the 70-percent balance placed with foreign insurers, added Clyde &Co.

source: Asia Insurance Review

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