- The State-Owned Economic Enterprises Law in 1989 made insurance a monopoly of the state. A proviso in the law, however, stated that, in a monopolised field the state could, with the appropriate approvals, arrange a joint venture with any other enterprise or allow another enterprise to operate on its own.
- Under the Myanmar Insurance Law 1993, the Myanma Insurance state monopoly was created and given the power to effect a joint venture or permit private companies otherwise qualified under the State-Owned Economic Enterprises Law to operate an independent insurance business. There is an exception that prevents such companies from becoming involved in motor third party insurance, or reinsurance, which must remain a state monopoly.
- The Insurance Business Law 1996 and the Insurance Business Rules 1997 concentrated on the participation of private companies in insurance business and licensing procedures. In the absence of any more recent laws it is understood that the new private insurance companies have been created under the conditions of these existing laws.
Chapters lll and lV of the 1996 law provided for the establishment of an Insurance Business Supervisory Board and stipulated that Myanma Insurance be represented on the board, although the company itself is not subject to Insurance Business Supervisory Board oversight.
- Ministry of Finance and Revenue Producers’ Order No 1/95 dated 30 December 1995 establishes maximum limits of motor third party liability compensation.
- The Third-Party Liability Insurance Rules of 2 May 2003 establish the modus operandi for effecting motor third party insurance with Myanma Insurance, as required by the Myanmar Insurance Law, 1993.
The Insurance Business Supervisory Board, under the direction of the Ministry of Finance and Revenue, is responsible for the supervision of insurance activities in Myanmar. The board’s responsibilities include:
- screening and approving applications for business licences
- setting the amount of paid-up capital
- setting the criteria by which the value of the assets and liabilities are to be determined
- setting the limit of investment for any insurance fund
- establishing the deposit, licensing fee and annual fees
- allowing direct insurance to be effected abroad for insurance businesses not accepted by insurers within Myanmar
- employing any local or foreign expert with the permission of the ministry for assistance in carrying out its work.
Chapter Xll, Article 35 of the Insurance Business Law 1996, however, exempts Myanma Insurance from the application of said law, that is, the company is effectively self-regulating and the Insurance Business Supervisory Board’s activities are, therefore, confined to other licensed insurance companies.
Admitted / Non-Admitted Insurance Regulatory Position
Non-admitted insurance is not permitted because the law provides that insurance must be purchased from local authorised insurers with no exceptions unless specific approval is obtained from the Ministry of Finance and Revenue.
There are no regulations restricting reinsurance arrangements other than the requirement for business to be directed to Myanma Insurance.
In theory reinsurance can be placed with any reinsurer although it is understood that Myanma Insurance set a minimum security rating of A- for reinsurers in its recent tender exercise.
- Motor third party liability.
- General liability for organisations which could cause damage to state or public life or property.
- Professional indemnity for insurance brokers.
- Property, marine and personal accident (PA) insurance for foreign investment enterprises.
- In May 2014 the Insurance Business Supervisory Board (IBSB) announced a new compulsory accident insurance for anybody travelling 100 miles or more on local roads.
Public sector employees must insure their lives and must purchase life insurance from Myanma Insurance.
Myanma Insurance is the only state-owned company transacts both life and non-life business.
Myanmar is hypothetically a free-rated market and there are no statutory tariffs, but all rating systems must be submitted to the Insurance Business Supervisory Board, which is responsible for approving tariffs.
Myanma Insurance, the former state monopoly insurer, establishes its own tariffs. The company’s state-owned status exempts it from any requirement to obtain supervisory approval, although in any event it has close ties with the Insurance Business Supervisory Board.
The business which the new private insurers are allowed to write is limited and the rates charged by each company must be the same.
There are no tariff restrictions on fronted business.
Premium Taxes and Charges
Non-admitted policies are not permitted. In the case of fronted policies, the premium taxes and stamp duty set out in the Taxation section of this report would be payable.
Despite the foregoing provisions a minimum stamp duty of MMK 25 is imposed.
The state-owned companies responsible for the national airline and ocean-going hull fleet are not liable for stamp duty.
There is no tax on reinsurance.
Policy wordings tend to follow international standards and Myanma Insurance is prepared to accept manuscript policy wordings when fronting for foreign insurers. Policies are normally written in Burmese, although foreign-invested clients often request policies to be issued in a language of their preference.
Policies are usually written in local currency, although policies may be arranged in foreign currency where a policyholder holds a foreign currency account. Where policies are written in foreign currency, premiums must be paid in that currency.
Myanma Insurance is the only insurer allowed to place reinsurance and has some small treaties placed in the international market.
Facultative reinsurance is used for placements which exceed Myanma Insurance’s treaty capacity.
Noteworthy facts about the Malaysia insurance market:
With the licensing of 12 new private insurance companies in 2013, agents are now allowed to deal with up to three insurance companies, one of which must be Myanma Insurance.
Myanma Insurance also sells direct to clients through 38 branch offices located throughout the country. Some of the new insurance companies have opened branches in regional cities and others plan to do so.
With a number of the new insurance companies being owned by banks and motor dealers, it can be anticipated that products will be targeted at the parent companies’ customers.
Local legislation permits the licensing of insurance brokers, but currently there are none, although one global broker has opened a representative office.
Life insurance follows the same patterns of distribution as non-life.
Myanmar is prone to seismic activity, particularly in the north. Current insurance exposures are low, as few companies or individuals purchase cover, and there is little industry in the north. Cover is available subject to additional premium at or around 0.2%. There have been no major losses in recent history and the Indian Ocean tsunami of 2004 had little effect on the country.
Myanmar is affected by the south-west monsoon which comes up through the Bay of Bengal, between May and October, during which time the country can also suffer from strong winds and the occasional cyclone.
The country also suffers heavy rainfall because of its monsoon climate and flooding occurs almost every year in the mid-monsoon period along the Chindwin, Ayeyarwady, Thanlwin and Sittaung rivers.
Slash-and-burn methods of cultivation prevail in many areas of the country, which increases the risk of bushfire, but the risk is considered minimal and cover is not requested often.