TOKYO/YANGON -- Five Japanese insurers have teamed up with local players to enter Myanmar's fledgling insurance market, looking to provide such products as annuities and automobile policies to a largely uninsured population.
The Myanmar government announced in January that foreign insurance companies would be allowed offer products in the country, either on their own or through joint ventures, after multiple delays in freeing its almost completely closed market. The application period for companies seeking to form joint ventures ends Friday for nonlife insurers and May 3 for life insurers. Shortlisted applicants will be announced in May.
Myanmar ended a long-held state monopoly in 2013, permitting 11 local private companies to begin offering insurance.
Japan's Tokio Marine Holdings intends to take a 35% stake, the maximum allowed, in Grand Guardian Insurance's casualty arm, owned by local real estate developer Shwe Taung Group. The investment is likely worth about 5 billion yen ($44.7 million).
Nippon Life Insurance will invest about 2 billion yen in a life insurance joint venture, also with Grand Guardian's life insurance arm.
MS&AD Insurance Group Holdings subsidiary Mitsui Sumitomo Insurance will join hands with local company IKBZ Insurance.
Sompo Holdings will team with AYA Myanmar Insurance under Max Myanmar Group, while Taiyo Life Insurance will partner with Capital Life Insurance.
Meiji Yasuda Life Insurance will gain a foothold indirectly through its 15% stake in Thai Life Insurance, which will form a joint venture with Citizen Business Insurance.
On April 5, the Ministry of Planning and Finance announced the list of foreign insures granted provisional licenses to operate through wholly owned subsidiaries. The list includes Japan's Dai-ichi Life Insurance, Hong Kong's AIA Group, Prudential of the U.K. and two other foreign insurers.
"The Myanmar market will grow larger, just as the Vietnamese market expanded after foreign companies were allowed to enter," said Satoru Abe, manager at Dai-ichi Life's overseas insurance development unit.
Myanmar's population tops 50 million, but its insurance market remains underdeveloped with premium revenue equaling only 0.1% of gross domestic product. Though accident insurance for snakebites is popular, life insurers hope to expand the market with endowment policies that can help policyholders save.
"Myanmar is free from the worries plaguing nonlife and life insurers in Japan, such as a declining population and automated driving," said an official in Japan's Financial Services Agency. "It has great potential."
The FSA has assisted Myanmar in building market infrastructure, helping it to modernize its regulations and build capacity, ahead of the entry of foreign insurers into the business.