Finance ministry eyes surge in Lao insurance business
The Ministry of Finance expects to see strong growth in the sale of insurance products over the next few years thanks to the government's policy to open up the financial sector.
The ministry, which oversees the operation of insurance companies in Laos, announced at the 36th Asean Working Committee on Finance Service Liberation in Vientiane yesterday that Laos expected to establish five more insurance companies between now and 2015.
There are currently six insurance companies, compared to just one in 1991. These firms are a mix of private companies and state-private joint ventures.
The two day meeting, attended by representatives from Brunei, Cambodia, Laos, Myanmar, Malaysia, Indonesia, the Philippines, Indonesia, Thailand and Vietnam, is discussing regional plans to open up the financial sector, including banking and insurance.
The Ministry of Finance's International Cooperation Department Deputy Director General, Mr Boualit Khounsy, delivered a speech to open the meeting.
Asean will establish a regional economic community in 2015, making the region a single production base and market, which will require the expansion of businesses such as banking and insurance.
According to a press release from the finance ministry, one of the main insurance business growth indicators is the rapid growth of gross written premiums. The value of premiums reached US$52.3 million in 2012, up from only US$7 million in 2009.
The finance ministry will continue to facilitate the investment and operation of insurance companies in Laos so that people can access services such as life insurance, natural disaster insurance, and agriculture insurance.
Agriculture insurance schemes give farmers confidence in investing in crop growing during a time of climate change, which is having a negative impact on yields.
In recent years, Lao farmers have suffered big losses due to flooding. Without insurance, they had no money to pay back bank loans.
Insurance against natural disasters will also give business operators more confidence about their operations during changing weather patterns. If they have insurance, businesses know they have the money on hand to support their operations if they lose property due to a natural disaster.
The finance ministry also says the remarkable increase in the number of insurance companies will not only enable people to buy more insurance but the growth of insurance premiums will enable these companies to invest in other businesses, which will further contribute to socio-economic development.