Cambodians surrender fewer insurance policies in 2023

| 21 Mar 2024

In a positive indicator of the financial awareness in the country, Cambodians surrendered fewer insurance policies in 2023.

The total number of surrender claims in the life insurance industry declined by about 44% year-over-year. In 2023, surrender claims were 8,101, down 43.9% from 14,452 the previous year. 

Insurers say this is a positive trend that needs to be highlighted. During the pandemic, there was an economic downturn, followed by job loss or business losses for many.

Insurers say they worked towards making premium payments more flexible to prevent policyholders from dropping out of the scheme.

“From my experience during 2021-2022, many clients couldn’t renew the policies given the economic impacts of COVID and requested to surrender the policies, a significant change in their long-term financial planning direction. For the first several years of the policies, the surrender value is normally not much compared to the premium paid. This is how life insurance policy works. We managed to successfully convince some to renew, some changed premium mode to quarterly or semi-annually and some got their policies reinstated,” said Mr Prou Sythan, CEO, Forte Life Insurance Company. 

Other insurers also say the industry as a whole has tried to adapt to economic headwinds. “I observe very proactive approaches by many life insurance companies to offer more options in premium renewals, including different premium modes (monthly, quarterly) and simplified underwriting requirements for customers to reinstate rather than to close their lapsed insurance coverage,” said Mr Rotha Chan, CEO, Manulife (Cambodia) Plc. 

The Insurance Regulator of Cambodia (IRC) has also heightened its efforts to increase financial awareness in the country. “We have held many workshops and conducted seminars to educate the public on the need for insurance,” said Mr Bou Chanphirou, Director General, Insurance Regulator of Cambodia, at a recent event in Phnom Penh. 

On the flip side, even though COVID-19 and its resultant economic challenges made things difficult for people, it also caused a shift in mindset, where more people realised the need for life insurance coverage especially for critical illnesses and mortgage protection. 

Now even though surrender claims were down by 44%, the surrender value of the claims was up 76% year-over-year. The surrender value of claims went up to $3.6 million in 2023, up 75.6% from $2 million in 2022, reported Khmer Times.