REINSURANCE BUSINESS
LICENSING REINSURANCE ACTIVITIES IN CAMBODIA, Prakas № 323 of the Ministry of Economic and Finance (“MEF”), dated 20 March 2019.
Pursuant to Article 41 of the Insurance Law (“Insurance Law 2014”) dated 4 August 2014, insurance activities in Cambodia are categorized into four types including (i) life insurance, (ii) general insurance, (iii) reinsurance and (iv) micro insurance. Life insurance companies are governed by Prakas No. 608 on Life Insurance Business in 2008. In order to comply with the Insurance Law, this Prakas is enacted for the purposes of governing insurance activities in Cambodia, allowing entities to legally carry out reinsurance activities, protecting consumers as well as promoting the sustainable development of the insurance market.
This Prakas also sets out the requirements and licensing procedures for insurance activities in Cambodia. Only legal entities are authorized to carry out reinsurance activities in Cambodia. Moreover, all insurance companies, whether state companies, private companies or joint ventures are only permitted to operate reinsurance business activities in the form of a Public Limited Company. In the event that the shareholders of a reinsurance company are natural persons, there must be at least three such shareholders.
Before conducting reinsurance activities in Cambodia, all the insurance companies, either newly created or incorporated as foreign branch, must request prior in-principle approval from the Ministry of Economics and Finance (“MEF”). After securing approval from the MEF, the companies have to prepare the required documents for business registration at the Ministry of Commerce (“MOC”), and all the compulsory requirements submitted to the MEF for the reinsurance business license as stipulated under Article 7 of this Prakas. Within 45 days from the date of receiving the complete application, the MEF will decide whether to issue the reinsurance license to the company.
Reinsurance companies are required to have minimum capital of at least KHR 5 million (approximately USD 1,250). The license fee for newly created companies or companies incorporated as foreign branch for the first year is KHR 800 million (approximately USD 20,000), whereas the annual license fee is KHR 50 million (approximately USD 12,500) and payable to the NBC. After receiving the reinsurance license, the insurance companies have to start business within six months otherwise the license will be invalid unless another permission is issued by the Ministry.
Additionally, Article 16 of this Prakas stipulates the penalty for late payment by the reinsurance company of the annual license from KHR 4 million (approximately USD 1,000) (late between one to five business days), and KHR 10 million (Approximately USD 2,500) (late by more than five business days) and other sanctions as laid down in the Insurance Law.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situation.
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This article is written by DFDL Lawyers.