A new life insurance company derived from Thailand’s leader in the eld is making inroads in Cambodia. Arjan Wes, the CEO of Sovannaphum Life Assurance, gives insights into the firm’s start and its strategy.
What experience does Sovannaphum Life Assurance bring to Cambodia?
Through our parent companies, we bring to Cambodia the experience of Muang Thai Life Insurance and the local knowledge of the Canadia group. Muang Thai has the technical expertise and is one of the strongest companies in Thailand. They bring all the essential ingredients to make life insurance work here in Cambodia: the actuarial expertise, the investments, and the operational know-how. In addition, Sovannaphum benefits from Muang Thai’s track record of excellence in bancassurance. After all, it was its bancassurance model that accelerated Muang Thai Life Insurance’s success.
Is the Cambodian market ready for life insurance?
Cambodia is a frontier market for many industries, and life insurance was only established in the country no more than four years ago. Early comers like Cambodia Life, Manulife and Prudential did a great job in starting the process of educating the market and the consumers on life insurance. Many may still doubt the market and question how much of the population is able to afford life insurance, but Cambodia is not a small country and our opportunities are constantly growing. We can’t underestimate the future opportunities that Cambodia can offer if managed well. It’s possible that less than 20 years from now, median income could be higher in Phnom Penh than in Bangkok. Also, if you look at life insurance in a mature market, it is a standard offering for banks; it’s a fundamental product that almost has to be offered. Cambodia will go through the same economic cycle as Thailand, but at a much quicker pace because companies like Sovannaphum have the expertise and experience to help facilitate that process.
With more life insurance companies coming in and Cambodia being a frontier market, is there a possibility of overcrowding?
If you look at the Cambodian market, there is an important amount of both banks and MFIs. What we can expect in the future is the consolidation of some of these banks. So we have yet to see how that will affect the market. Today, if you look at more matured markets, there are fewer but stronger banks. Consolidation is a positive thing and makes markets stronger, so long as we avoid a strong concentration of banks because competition then becomes negative for the consumer. So, at the moment, there are opportunities for life insurance companies to find partners.
What model do you plan to use in Cambodia?
Muang Thai found its success through its bancassurance distribution model, in partnership with Kasikornbank. The concept of bancassurance came into the Thai market around 2002 or 2003, and Muang Thai Life, as an already well-established life insurance provider in the Thai market, even further propelled its growth from 2005 onwards by developing successful bancassurance relationships in Thailand. It had very close relationships with the banks, which allowed them to zero in on the banks that could really benefit from a partnership. Muang Thai had to really think like a bank, rather than just a life insurance company, so the success of Muang Thai lies primarily in bancassurance, next to using distribution through agents for life insurance products. I have no doubt that Sovannaphum can replicate this very model in Cambodia.
How do you see competitiveness of the market?
Of course there will be competition, but the market itself will develop so quickly that I don’t see it as competition directly between life insurance companies. Rather, I see it more as companies being able to ensure they service their bank partners correctly. This will allow success to ensue. Ultimately, if a bank is not happy with its service provider, they will have the option of partnering with other companies like us. And, in some way, that is a form of competition to get a stronger bank client base. The competition is not so much on a product and people level, because we see there are plenty of opportunities for everyone.
As the new kid on the block, what are your current priorities for the company?
One of our first priorities is servicing all the Canadia Bank branches in Phnom Penh by the end of this year. Toward end of next year, we plan to go nation–wide, and supporting each branch means placing life insurance advisors in each branch. Our second priority is building our corporate brand. We want people to easily recognise our company as a Cambodian company, and to relate to us through our Cambodian identity. Sovannaphum is a truly Cambodian name and I think this makes us special, compared to our competition. Thirdly, we want to ensure that we bring up enough talent to help move our company forward. Having lived only two months in Cambodia, I can already tell you the talent pool is plentiful. If you were to take talent in its traditional sense, it would be people who are already prepared for life insurance jobs, like an actuary. In more matured markets, we are used to recruiting people who already know what to do, but in Cambodia we have to see talent as a blank canvas–people who are intelligent and highly capable. We have to remember that this industry is very new, so the education for life insurance careers is yet to be fully developed. There are plenty of rough diamonds in Cambodia, now they just have to be polished.
Words & photograph by Vivaddhana Khaou