Market Alert: The Changing Myanmar Insurance Market — Frequently Asked Questions

What Has Changed In Myanmar?

For the first time in half a century, the state-owned insurance organization in Myanmar (“Myanma Insurance”) will permit private firms to offer insurance services.

In addition, most governments have substantially eased sanctions against Myanmar in response to recent reforms in the country. However, certain restrictions on doing business in Myanmar remain, including under U.S. law prohibitions against doing business with certain designated organizations and individuals in Myanmar, and extensive reporting requirements regarding new investment.

What Private Insurance Companies Have Been Approved?

As of June 2013, the following entities have been granted conditional approval to offer insurance:

• Aung Thitsar oo Insurance Co. Ltd.
  
• Ayeyar Myanmar Insurance Co. Ltd.
  
• Excellent Fortune Insurance Company Ltd.
  
• First National Insurance Co. Ltd.
  
• Global World Insurance Co. Ltd.
  
• Grand Guardian Insurance Public
  
• IKBZ Insurance Public Co. Ltd
  
• Pillar of Truth Insurance Co. Ltd.
  
• Yang Insurance Global Co. Ltd.

To commence operations approved companies must meet capital requirements, which are not insignificant. Life insurers require paid-up capital of K6 billion (approximately US$7 million) and composite insurers that offer both life and general insurance require a total paid-up capital of K46 billion (approximately US$53 million).

Additional insurers, while not at present admitted within Myanmar, have or are establishing representative offices. These include:

• Sompo Japan Insurance Inc
  
• Tokio Marine & Nichido Fire Insurance Co., Ltd.
  
• Mitsui Sumitomo Insurance Co., Ltd.
  
• United Overseas Insurance
  
• ACE

We anticipate that additional insurance companies will seek to establish presence in the near future.

Is Non-Admitted Insurance Permitted In Myanmar?

The Mynamar Insurance Law, passed in 1993, mandates that certain compulsory insurances be placed with Myanma Insurance, that state-owned entity which provides insurance. As the market is opened up for a limited selection of private insurers revisions to the law are anticipated, but exactly when the ruling will be, or its particulars, are uncertain.

Are There Compulsory Insurance Requirements In Myanmar?

The Myanmar Insurance Law contains several provisions concerning compulsory insurance that must be effected with Myanma Insurance:

• Government servants are required to effect life assurance.
  
• Owners of motor vehicles are required to effect Third Party Liability Insurance.
• An entrepreneur or organization operating an enterprise which may cause loss to State-owned property or which may cause damage to the life and property of the public or which may cause pollution to the environment are required to effect compulsory General Liability Insurance.
  
• There also appears to be a “catch-all” provision whereby the government can unilaterally define which entrepreneur or organization will fit the definition of one that triggers the need to purchase compulsory General Liability Insurance.
  
• With respect to foreign investment, the law is not specific with respect to what classes are required. Rather, the law broadly states that “Economic Organizations that have been formed under a permit under the Union of Myanmar Foreign Investment Law shall effect classes of insurance which the Myanma Insurance determines from time to time.” Concurrently, the law also provides an exception: “However from amongst the classes of insurance which the said Economic Organisations are to effect the Ministry of Finance and Revenue may exempt from effecting insurance of any class or more than one class, in the interest of the State.”

Can Marsh Service My Business In Myanmar?

Marsh can service your business in Myanmar as is consistent with applicable laws and so long as its provision of services would not expose Marsh and its affiliates to any sanction, prohibition or restriction under applicable trade or economic sanctions, laws or regulations.

Presently the Myanmar insurance market is handled by Marsh’s global service teams in Singapore with additional support from Marsh Vietnam.

How Do I Arrange A Locally Admitted Policy in Myanmar?

Marsh clients who require a locally admitted Myanmar policy may consider a fronted policy. This is a common solution in various foreign jurisdictions and it bears noting that fronting fees frequently amount to 20 percent of the policy premium. Additionally, clients should allot sufficient time for the transaction as operations in Myanmar may involve a longer time frame than is customary in domestic markets.

Please note that this client bulletin offers a general overview only and there may be restrictions and conditions on your company’s ability to enter the Myanmar market. Please consult your legal advisors regarding doing business in Myanmar.