By the time you reach the end of this sentence someone somewhere deep in the jungles of Myanmar will have suffered what experts at the World Health Organisation call an “envenoming”.
In other words, they will have been bitten by a snake whose venom will either kill them quickly, condemn them to a slow, lingering death or require the amputation of a poisoned limb.
Obviously, after such an event, your first call would be to a doctor and in Myanmar chances are the second would be to your insurance agent. After fire and vehicle cover, insurance against snake bites is one of the most popular policy types in the country.
Popular in the case of Myanmar is somewhat of a misnomer. A measure of how massively underdeveloped the country’s insurance sector is revealed by the fact that just 0.1% of the population is insured.
That is due in part to cultural resistance – most of the country’s 53 million people don’t see the point of insurance, view it as inauspicious or harbour a deep distrust that insurance companies will actually pay out. But it is also the result of insufficient political will born out of decades of authoritarian military rule, which is only now, slowly, opening up to the idea of democracy.
However, change is in the air.
March 1 marks the deadline for hitherto unwelcome foreign insurance companies – outside of the country’s special economic zone – to submit applications for entry to Myanmar’s fledgling insurance sector.
In early January, the country’s Ministry of Planning and Finance announced it was opening up the market to up to three foreign insurance companies who will each be allowed to operate as 100% wholly-owned subsidiaries.
The ministry also unveiled a further option for overseas policy providers to form joint ventures with a small number of local firms now operating in the wake of domestic reforms in 2013.
Advocates of insurance market liberalisation contend that one of the most significant benefits will be the creation of a market for long-term bonds, which could provide much-needed funds for the government to invest in health, infrastructure and education.
That, in turn, could help reverse an over-reliance on the central bank to fund the nation’s deficit.
For Sean Turnell, a special economic consultant to State Counsellor Daw Aung Sang Suu Kyi, the liberalisation of the insurance sector can help to drive the development of local capital markets.
“When life insurers issue policies to customers they are required to match them with secure, long-term assets in the same currency,” he told FinanceAsia. “Government bonds are a favourite of insurers as can be seen in the more mature examples of the insurance markets in Thailand and, more recently, Vietnam.”
Turnell, who is director of research at the Myanmar Development Institute, added: “I am not saying it is a free lunch – there is no such thing – but it is as close as you are going to get. It is almost a perfect match.”
That said, there is some local resistance to opening the door to competition from foreign policy providers.
It comes from the Myanmar Insurance Association (MIA), which was set up in early 2017 by the 11 companies granted licenses following the domestic reforms of 2013.
In early February, MIA’s joint secretary U Myo Min Thu was quoted in the Myanmar media as saying that they were against allowing 100% foreign-owned firms due to concerns that, with only five years of experience, local insurance companies would struggle to compete with the big foreign operators.
That, after all, appears on the surface to have happened elsewhere. In Vietnam, for example, global insurance giants Prudential and Manulife together account for 42% market share.
Turnell fully accepts and understands the resistance of local operators but believes it can be overcome.
“[The] pushback against the big foreign players is only to be expected but another way to look at it is that their entry into the market will increase the number and type of insurance policies on offer thereby creating a bigger pie on which everyone can feed,’’ Turnell said.
In a May 2018 report prepared for the United States Agency for International Development together with his colleague at Macquarie University, Professor Ha Vu, Turnell summed up the situation he believes Myanmar finds itself in.
“Myanmar can draw upon many lessons and experiences from other countries further down the liberalising track,” the report concluded. “Not the least of these is Vietnam, a country that began from a similarly inauspicious place, and carried familiar colonial, socialist and nationalist baggage. The parallels are not exact yet they are sufficiently proximate to be instructive.”
Only time will tell.