Approximately 20 percent of vehicle owners have bought a comprehensive coverage insurance policy despite the rising number of motor vehicles used for transportation.
According to the state-run insurer Myanmar Insurance Enterprise (MIE), the number of vehicles users are increasing day by day, but only a few have purchased full coverage so far due to the public’s unfamiliarity with insurance policies and lack of trust in the system.
“Comprehensive coverage as an insurance policy has been in place for a long time. There were some owners who bought it, but the owners had to wait for a long period of time for that. So the public is hesitant to buy it,” Ko Tayoke Lay, owner of the Bus Line No.45, told Myanmar Business Today.
Because the public has so little trust in insurance, the respective insurance companies need to be very transparent and need to promote insurance knowledge to the public, industry insiders say.
As there has been motor vehicles accidents daily, comprehensive coverage insurance is essential.
“Many cars have been imported to Myanmar in recent years and the rate of car accidents is rising. If they had bought insurance, they wouldn’t need to worry about [paying for repairs by] being hit by other cars or if a car is stolen, the insurance company will cover it.
“However, very little people know about that and there are still very few people who buy comprehensive coverage insurance policy. We still need to conduct knowledge-promoting programs,” U Aye Min Thein, managing director of MIE told Myanmar Business Today.
Though the private insurance companies have been implementing knowledge-promoting programs and advertisements, people still have very little interest in the insurance sector.
“This happens because most of the people think buying an insurance policy is superfluous and it can be done only when there is extra money,” Daw Marlar Nyunt, general manager of Aung Thitsar Oo Insurance Company, said.
“Most of the people think insurance is not needed. If they’re careful enough, there will be no accidents. They think that way. Actually, if their car gets hit by other car, the company will cover the charges. Even if the car is stolen, the company will cover the charges. People need to know that.”
According to the car owners’ community, they are interested in a comprehensive coverage insurance policy, but fulfilling the basic needs of the family is the first priority, so buying an insurance policy comes further down the list of priorities.
“We would like to have that insurance for our car, but we have to settle our basic needs first. The money we would spend on insurance is very useful in some other matters. If we have excess money, having insurance is not a problem. As we need to survive day to day, we are not very interested in having insurance,” said U Kyaw Min Naing, a car owner.
While it may not be important for family-use motor vehicles to have comprehensive coverage, it is essential for rental cars and taxis to have insurance.
Because taxis are running throughout the day, they are far more likely to have an accident and should have full insurance coverage.
“Taxis are always running on the road. It is very easy for them to get into an accident. They have more possibility. The vehicles owners always worry about their vehicles. If they have insurance, they don’t need to worry. The company will cover all the charges,” said U Aye Min Thein.
However, the premium rate for comprehensive coverage insurance is 1.2 percent of the value of the motor vehicle and it would cost the owner around K500 per day.
If the number plate of the vehicle is black, the premium rate is 1.2 percent of the value of the motor vehicle and if it is red, the premium rate is 1.8 percent of the value. Black plates indicate the vehicle is for private use while red plates indicate the vehicle is used as taxis.
Myanmar Insurance Enterprise had been the sole player in the insurance business for about 50 years. It was only in 2013 when the government decided to allow private insurance companies. After more private insurance companies enter the market, the public will become more knowledgeable about insurance practices.
The rate of purchasing insurance is on the rise but it is still much lower than expected. So far, the most purchased insurance at the private insurance companies are fire insurance but comprehensive coverage insurance comes in at second place.
Importation of vehicles were liberalised in 2013 and currently there are more than 600,000 vehicles throughout Myanmar.
Source: Myanmar Business Today
