The effects of COVID-19, with people facing unemployment or pay-cuts, mean that insurance policyholders are struggling to pay their premiums and their cover is lapsing.
“As of today, there are 1,322 mispayment policies, among which 818 are paid monthly,” said Kinal Nang, vice-president and head of marketing and branding at Sovannaphum Life.
“If the premium payment is not made within the grace period of 31 days, the policy lapses. The policy holder can reinstate the policy within two years [terms and conditions apply]. Under the Win-back project, we allow the reinstatement of a policy without having to pay interest,” Nang added.
He added his company issued 16,286 policies in the first six months of 2020. He compared the difference with 2019 and said the number of policies was 98 percent and the annual premium equivalent (APE) was 112 percent. APE is a measure used for comparison of life insurance revenue by normalising policy premiums into the equivalent of regular annual payments. This is particularly used when the sales contain both single premium and regular premium business. In 2020, there were 16,286 policies issued, with an APE of $5,621,255.74. In 2019, there were 16,584 policies with an APE of $5,002,963.60.
For policyholders who are facing difficulties, Sovannaphum Life provides relief such as premium deferment, reinstatement and surrender.
Chairman of the Insurance Association of Cambodia (IAC) Huy Vatharo said the micro-insurance market, which protects low-income people, experienced negative growth in the first half of 2020, especially micro-life and micro-health products. The slower growth of life insurance and the decrease of micro-insurance may indicate a sign of the negative impact of COVID-19 on the insurance market, especially insurance products relating to individual life insurance coverage.”
“The slower growth of life insurance and negative growth of micro-insurance may be caused by both the loss of income and the loss of contact with customers because of social distancing measures during this pandemic,” he added.
When asked whether the association provides relief to the insurance companies and customers, Vatharo said: “The IAC is not in a position to provide any relief to any stakeholders.”
Vatharo further said the insurance market gross premium for the first half of 2020 reached $133.5 million, up 12.1 percent year-on-year. The growth was driven by the increase of the general insurance market of 17.5 percent and the life insurance segment of 9.7 percent, while the micro-insurance market dropped 17.7 percent year-on-year. “Of the total market gross premium, life insurance represents 54.5 percent, non-life 43.4 percent and micro-insurance 2.1 percent,” he added.
“As you can see from the above figures, the overall insurance market still continued to grow during this pandemic time. However, it’s worth noticing that while the general insurance market maintained its growth momentum, the growth of life insurance market premiums in 1H20 [the first half of this year] was slower as compared with that of 1H19 [9.7 percent in 1H20 against 55.3 percent in 1H19],” he added.
President of Forte Insurance Chamrueon Rith said: “The premiums booked for the first six months [of the year] were $27.4 million. We cannot give figures for the collection because some clients have paid on time. However, a few are not able to pay because of a lack of jobs or wage cuts as a result of the pandemic”.
He said that twenty percent of our clientele have requested us either to extend the time limit for their payments up to 90 days or else asked whether they can pay in part. Company has given leverage to such clients. According to the law, the period allowed for a lapsed policy or delay because of COVID-19 is 30 days. If the client still cannot pay within this time, they need to write so in black and white and give the company a valid reason. Although a few clients do not give a reason, Forte will call and ask them [for one].
However, there are very few clients who our team have been trying to constantly follow up, despite the fact they have not specified any reason, so our company has every right to cancel their policy, which will lead them to lose their coverage.
This article was first published in Khmer Times. All contents and images are copyright to their respective owners and sources.