a. Insurance Law

Aticle 1

law is enacted with the purpose of regulating insurance activities to protect the legitimate rights of the parties to the insurance contract, to strengthen the supervision and control of the insurance business and contribute to the development of the insurance industry.

Aticle 2

This law shall apply to all insurance activities within the Kingdom of Cambodia.

Aticle 3

The term "Insurance" as used in this law refers to the commercial contract whereby an insurance applicant, as contracted, pay the insurance premium to the insurer, and the insurer bears a liability to indemnify for property damage or loss caused by occurrence of possible accidents or when the insured sustains death, bodily injuries, disabilities or sickness or when the insured reaches the maturity agreed by both parties as specified on the insurance schedule.

Article 4

Only insurance company, agent and broker are eligible to underwrite insurance business.

Article 5

In carrying out the insurance business, insurance companies, agencies and brokers shall respect the principle of fair competition in accordance with the provisions of this law.

Article 6

Natural persons and legal entities who are allowed to conduct insurance business shall be subject to the laws and regulations of the Kingdom of Cambodia.

Article 7

The Ministry of Economy and Finance shall be responsible for the control and supervision of the insurance business in accordance with this law.

Section 1: General
Article 8

Insurance which is beneficial to the insured natural persons or legal entities who have insurance interest, whether life or non-life, over the subject matter shall be the subject of a contract made only with insurance companies licensed to underwrite insurance business in the Kingdom of Cambodia.

Article 9

An insurance contract in Khmer language is an agreement whereby the relations of rights and obligations of the insured and the insurer are enumerated. An insured means a person who concludes an insurance contract with an insurer and undertake to pay the insurance premium as contracted. An insurer means an insurance company that concludes insurance contracts with the Insured and bears the liability to indemnify and/or to pay the insurance benefit.

Article 10

In making insurance contracts, the Insured and insurers shall respect the principles of fairness, mutual benefit, and unanimity through negotiation and shall not harm the public interests.

Article 11

In executing the insurance contract, each party shall have the rights to cancel the insurance contract before expiration by a prior notification through a registered letter or letter of notification duly acknowledged.

Article 12

When the natural person or legal entity proposes an insurance policy and the insurance company agrees to accept the proposal, and after an agreement on contract clauses are reached, the insurance contract shall be deemed as concluded. The insurance company shall then issue the insurance policy attached with the insurance certificate to the insurance applicant. The insurance policy attached to an insurance certificate shall contain and specify important terms and conditions agreed upon by both parties.

Article 13

The insurance certificate shall contain the following particulars:

• Full name and address of the Insured;
• Person or subject matter to be insured;
• Types of risks to be covered;
• Commencement date and location of risk to be covered;
• Insured value;
• Insurance premium and method of payment;
• Methods and conditions for declaration of risks;
• Term of contract and period of coverage;and
• Terms and conditions of nullification and forfeiture of rights under the insurance policy and conditions allowing each party to terminate the insurance policy before the expiration date.

Article 14

Only the insurance policy or cover note specifies the mutual insurance between the insurance company and the Insured. The insurance application shall not cover both parties. A proposal for renewal, amendment or reactivation of the suspended insurance policy shall be deemed approved if the insurance company has not refused such proposal within fifteen (15) days.

Article 15

The period of insurance contract is defined in the insurance policy. Any additions, modifications to the original policy shall be made by an additional clause (endorsement) and signed by both parties thereto.

Article 16

The Insured shall have an insurable interest from the subject matter insured. An "insurable interest" means an interest or benefit to which the Insured shall have the right in relation to the insured subject matter. An "insured subject matter" means any property or benefits in relation to the property, life or body of an individual.

Article 17

After the insurance contract was concluded, the Insured shall pay the insurance premium as agreed. The coverage shall enter into force from the date of payment of the insurance premium by the Insured as stated in the insurance policy.

Article18

Any failure to make payment of insurance premium when due, the validity of coverage can not be suspended more than thirty (30) days from the date the insurance policy is signed. The insurance company shall notify through a registered letter or a letter duly acknowledged by the Insured or person who is obligated to pay the premium to make payment at the agreed place within twenty (20) days after the insurance contract is concluded. If the Insured still fails to pay the premium within a period of ten (10) days after notification, the insurance company shall have the right to cancel such insurance contract.

Article 19

Any loss or damage arising out of the risks covered under the policy schedule shall be indemnified by the insurance company. However, the insurance company shall not indemnify for loss or damage caused by willful conducts or fraudulent acts of the Insured. The insurance company shall also cover for loss or damage caused by persons being under responsibility of the Insured, irrespective of the type or the seriousness of the case.

Article 20

An insurance contract shall be deemed null and void if the insurance company has found that the Insured had concealed the truth, or willfully misrepresented material facts which lead to any change of the insured subject matter. Forgetful, unintentional, and/or unclear declaration of the Insured shall not be a ground for cancelling the insurance policy.

Article 21

When it is found that the risk is intentionally created by the Insured, irrespective of the settlement of the claim, and the insurance company has uncovered the fraud substantiated with proofs and evidences, the insurance company shall have the rights to refer the case to the court to void its liability or reclaiming back any settled amount.

Article 22

The terms and conditions of coverage and any rights of the Insured specified in the insurance policy shall be deemed null and void in the event the claim adjustor has uncovered the fraud and the Insured had admitted to the wrongdoings.

Article 23

In a liability insurance, if the insured causes loss or damage to a third party, the insurance company will directly indemnify the victim. A liability insurance is a type of coverage whereby the indemnity must be made directly to the third party being the insured subject-matter.

Article 24

In the case of reinsurance, the principal insurance company still bears liability before the Insured. A reinsurance transaction is a system of insurance in which the principal insurance company is insured by another insurance company that wholly or partially reinsured the risk accepted.

Article 25

The Statute of limitation for claim settlement shall be provided for in the insurance policy. However, the statute of limitation shall not exceed three (3) years from the date of occurrence of risk. The statute of limitation shall be terminated by the agreement of both parties, after the survey report of the loss adjusters is finalized. Section 2: Property Insurance

Article 26

A property insurance is a contract of indemnification when a risk occurs. The claim amount paid by the insurance company to the insured shall not be over the value of the subject matter insured as declared in the insurance contract, except otherwise agreed by both parties.

Article 27

In the event of total loss of the subject matter insured caused by a risk which had not been written in the insurance policy, then the insurance shall be legally terminated and the insurance company shall refund the insured ninety percent (90%) of the insurance premium for the remaining period.

Article 28

When the insurance company has paid the claim, the Insured shall give the subrogation rights to the insurance company to claim the third party that caused the damage and claim for refund of the claim amount already paid. However, the insurance company can not claim against the descendants, heirs, relatives, manager or employees who are living in the residence of the Insured, except for malicious acts caused by anyone of them.

Section 3: Individual Insurance
Article 29

For individual insurance, the insured sum declared in the insurance policy is the maximum limit of the compensation amount payable under the policy. Individual insurance shall include life insurance, health insurance and physical injury insurance.

Article 30

After payment for a claim, in the case of physical injury insurance, the insurance company may not obtain any subrogation right from the contracting party or beneficiary for the purpose of suing against any third party.

Article 31

person can purchase a life insurance for himself or for a third party subject to a written approval of the latter and indicating the exact amount of the sum insured. The following conditions shall invalidate an insurance policy in the case of death:

• A person has a functional nervous disease.
• A person who is hospitalized in a psychiatric hospital.

Article 32

Other than the necessary terms and conditions specified in the insurance contract a life insurance policy shall indicate the following:

• Full name, date of birth of the applicant;
• Full name of the beneficiary, if any;
• Any events or terms providing for the refund of insurance premium; and
• Conditions of exclusion if specified in the contract.

Article 33

A life insurance policy shall be deemed null and void if the Insured commits suicide.

Article 34

An insurance policy shall be voided against the beneficiary when the beneficiary intentionally kills or conspires to kill the Insured.

Article 35

Any dispute arising between the insurance company and the Insured which cannot be settled through compromise or arbitration can be referred by both parties to the competent court in the Kingdom of Cambodia.

b. Premium insurance revenues increased 18 percent

The figures from the General Insurance Association of Cambodia – GIAC – revealed that the premium revenues from Cambodia’s insurance sector was up by 18 percent to USD8.2 million during the first five months of 2010, but it was down 25 percent compared to the same period last year.

Chhay Rattanak, GIAC Chairman, was quoted by the Post as saying that the premiums from firs insurance contributed 26 percent, motor and miscellaneous insurance 25 percent each, and medical and health insurance, 16 percent to revenues.

The sum for claims in the first five months of 2010 was USD2.34 million, down 25 percent in comparison with the same period last year.

In General, the trend for buying premium insurance has been increasing. The upward trend is back on track, especially engineering and medical insurance, said Rattanak. He forecast that the industry would grow by between 10 to 15 percent this year.

At the present, there are six insurances companies operating in Cambodia, including Forte, CAMINCO, Asia, Campubank Lonpac, Infinity, and Cambodia-Vietnam Insurance. The insurance industry made total premium revenue of USD20.07 million last year.

c. Insurance firms see healthy growth

By Lachlan Forsyth
Phnom Penh Post, Issue 16 / 16, August 10 – 23, 2007

The Kingdom’s recent banking bonanza has prompted one of Cambodia’s richest men, Kith Meng, to help launch Infinity Insurance in an attempt to harness the industry’s increasing profits.

Jeffrey Whittaker, Infinity’s chief operating officer, said huge inroads made in recent years by the banking industry and foreign direct investment had shown Cambodia was a viable, and lucrative, market.

“It’s no longer just aid that’s coming in. Aid is nice but foreign direct investment is much better. There are a lot of infrastructure projects going on – railways, roads, sewage and wastewater treatment, new cities – it offers a lot more scope for insurance business.”

Infinity has some high quality backers, among them global giant Swiss Re and Meng’s Royal Group which includes Mobitel, ANZ Royal Bank and CTN.

In order to operate in Cambodia, insurance companies must have $7 million worth of capital. This is a government requirement in order to ensure companies have enough cash in reserve to meet claims.

Insurance is viewed as an essential product for a well-functioning financial market. As the government plans to introduce, among other advances, a Cambodian stock market, new insurance carriers are undoubtedly to be welcomed.

But the industry has had a stuttering start.

In 2004, market leader Indochine, was forced out of business when it failed to meet government demands for a $700,000 installment of its required $7 million capital.

Indochine managing director Philippe Lenain said he had been victimized by the government-owned Caminco, and was hounded out of business despite his assurances he could meet capital demands.

He said that such high operating costs in an industry then worth just $8 million would strangle the life out of industry players.

Lenain fled the country with his family after taking refuge in the French Embassy when he claimed their safety had been threatened.

Those who remained in the market are now seeing considerable gains.

Cambodia Re Director of Operations, Rath Sarath, said after a slow start the company was now starting to see profit.

As a reinsurer, it provides financial backing to insurance companies in exchange for a compulsory stake in the state-owned company. “Up until now my company was successful but not so successful that we could say profitable,” he said.

Cambodia Re’s annual report showed a 20 percent Gross Written Premium or GWP – which refers to the total premium from all policies – increase in 2006 and it doubled its net income from 2005.

As the profit increased it was able to continue its investments and ensure that capacity [the amount of cash reserved to ensure claims are paid] was extended each year – ultimately benefiting the insurance companies.

The capacity and number of insurers was likely to increase year on year, he said.

Whittaker was similarly excited by Cambodia’s potential now that overseas cash was flowing, but admitted there were several challenges to overcome.

Infinity’s product range includes construction, engineering and marine cargo policies and policies such as fire, theft and personal injury, the former aimed squarely at the corporate market, with the latter also applicable for individuals.

Policies for fire, engineering and construction, motor and miscellaneous (including liability) insurance accounted for 87 percent of all non-life GWP in 2006, and industry figures showed these classes had been steadily growing for the past eight years.

However, about 95 percent of these policies are placed with the corporate market, and the remaining personal policies are largely motor policies, often placed through corporate schemes.

These figures showed that although the corporate market was increasingly aware of risk and insurance was becoming more commonplace, breaking into the personal insurance market would be much more difficult. “The sheer fact is up until the last couple of years not many individuals had bank accounts – it was a cash society,” said Whittaker.

“The perception is it’s expensive, it’s a luxury product. We’re aiming to convince the public that insurance is not a luxury, it’s an affordable essential product – it’s more expensive if you have an accident and have no protection at all.”

The total insurance market in Cambodia, estimated to be worth less than $8 million in 2004, has now grown to $15 million and is expected to increase rapidly as its potential is realized.

A 2005 Ministry of Economy and Finance industry review said the non-life insurance business in Cambodia had been growing at more than 25 percent compound for the past four years.

It anticipated an explosion in the personal and medical lines of business as incomes rose.

Cambodia’s current crop of insurers is small – Infinity joins Caminco, Asia Insurance, Forte and Cambodia Re.

But anticipated market projections suggest more competitors would soon join them.

The government’s “open, friendly investment policy” meant there were few barriers towards setting up business in Cambodia, said Whittaker.

The perception of insurance and in banking until a few years ago was “we don’t do banks, we keep it under our beds,” he said.

The intangible nature of insurance was often a reason for reluctance, said Whittaker, but the fact remained insurance was “one of the cheapest financial products in the world.”

“People don’t think about it…they’re willing to buy a flat screen TV and a car and everything else but insurance comes at the very bottom of the pile. That’s our problem to change.”

Insured for a good reason Lloyd’s of London

• Lloyd’s of London – the world’s largest insurance market – started in Edwards Lloyd’s Tower St coffeehouse in 1688. Sailors, merchants, ship-owners and others from the shipping community would meet to discuss shipping news and make insurance deals.
• Chinese merchants are believed to be the first to practice a form of insurance, around 2000-3000BC. When the traders encountered violent river rapids they would spread goods among many ships in the event one met an unfortunate demise.
• In 2006 a British insurer reportedly insured three Scottish sisters against Immaculate Conception. The policy, intended to cover the costs of raising the Son of God, was later cancelled after complaints from the Catholic Church that it was in ‘poor taste’.
• Among the more impressive personal assets to be insured are Keith Richard’s fingers; Marlene Dietrich’s voice; America Ferrera’s [TV's Ugly Betty] smile for $10m; Dolly Parton’s 42″ bust for $600,000; Betty Gable’s legs for $1m, thereby giving rise to the expression “million dollar legs”.

1. Dap-news
2. Phnom Penh Post
3. Koh Santepheap Daily
4. Kampucheathmey
5. voanews
6. RFA
7. Khmer
8. Khmer Radio Australia