THE devastating effect of Cyclone Nargis has raised public awareness of the benefits of insurance but failed to convince people to take out policies, according to Myanma Insurance chief Dr Mg Maung Thein.

“After Nargis Cyclone, more people have become interested in insurance but really, it is just awareness not practise,” said Dr Mg Maung Thein, general manager of the state-run Myanma Insurance, which is the country’s only insurer.

Myanma Insurance paid out more than K3.3 billion in compensation on August 12 to businesses with damaged property during Cyclone Nargis, which hit Myanmar in early May. However, Dr Mg Maung Thein said this figure was set to rise further in coming months. “The claims processes for some other businesses have been processed and we expect to pay next month,” he said.
The K3.3 billion pales in comparison to the actual losses stated in the Post Nargis Joint Assessment report.

The report, released in July, estimates that the agriculture sector alone suffered damage of more than K186 billion, not counting future losses. The industrial sector, which Dr Mg Maung Thein said is the most likely to have a fire insurance policy, endured damage of more than K500 billion, 45 percent of which was attributed to businesses in Yangon’s industrial zone.

Policies for natural disasters, such as floods, earthquakes and cyclones, are encompassed under the title of fire insurance.

“Some big companies buy this kind of premium but really, nationwide, the number of properties with a fire insurance policy is only a small amount,” he explained.

When Mandalay’s Yadanarbon Market was destroyed by fire in late February, it later emerged that, of the 1500 businesses damaged in the blaze, only four carried a fire insurance policy. One company was particularly unlucky, having let their K222 million policy lapse just two months before the fire.

“The Sky Walk Shopping Mall also carried US$3 million in fire insurance through a Malaysian insurance comp-any. The policy covers the shopping mall building but not the shops inside the building,” Dr Mg Maung Thein told The Myanmar Times in March.

He said that fire insurance is important not only for businesses but also residential properties.

“We offer fire insurance for contents as well – mainly home appliances such as a television, fridge and computer. But it’s really only the foreign-owned companies and the embassies who buy a policy for their valuable objects.”

There are fire insurance policies designed to cover all manner of buildings, including homes and offices. There is also construction insurance, which can be applied from the beginning of construction, he said.

Comprehensive constr-uction insurance is one of the most important policies Myanma Insurance offers, Dr Mg Maung Thein said, and really should be essential for all construction firms.

The policy was introduced about 20 years ago but has failed to take off, once again because of a lack of insurance awareness among construc-tion business owners, which the policy is designed for. It covers accidental damage, including machinery break down, damage or loss, he said.

“Local construction comp-anies never buy this kind of premium. For some of the larger, foreign-owned constr-uction projects such as the Sedona hotel, Traders Hotel and Sakura Tower, Myanma Insurance took out reinsur-ance policies from the overseas insurance comp-anies,” he said.

But if engineers change or alter the design of the building, the construction insurance policy will no longer be valid.

The premium rate is approximately K0.13-.15 per K100, or .13-.15pc.
Dr Mg Maung Thein said construction insurance was not limited to only construction businesses but also residential buildings and small commercial enterprises, such as warehouses.

He said one option the government had to encourage people to take out fire insur-ance is making it mandatory for property owners.

“Some foreign countries have laws that make insurance compulsory but in Myanmar, people can do as they like.”