"We need to give these local companies a chance to gain some experience in this business. And then, we will allow foreign investors to do insurance. I think it will happen around 2015," Dr. Maung Maung Thein, deputy minister of finance and revenue, said on the sidelines of an investment forum in the nation's capital.
His comments come after the head of Prudential Plc (>> Prudential plc), Britain's leading insurer, expressed interest in Myanmar, and roughly a week after Myanmar's government issued insurance licenses to 12 privately-owned domestic companies.
As Western economies slow and the developed economies in Asia become saturated, insurers are increasingly turning to Southeast Asia, drawn by its growing middle classes and lack of insurance policy holders.
Few in the industry expect major revenues from individual Southeast Asian countries, but they acknowledge the growth potential within the 10-member Association of Southeast Asian Nations (ASEAN).
Myanmar, with its population of around 60 million, is expected to post real GDP growth of around 6 percent over the next five years, according to the International Monetary Fund.
Prudential, which recently won in-principle approval from the Cambodian government to open a wholly foreign-owned life insurance operation there, said last month it was also considering a move into Myanmar. "We are looking all the time at global opportunities Myanmar is on our radar," CEO Tidjane Thiam said.
The 160-year-old insurer generates 45 percent of its sales in Asia, and Thiam said less-developed Asian economies, where take-up of insurance is low, have stronger growth potential as more people will insure themselves and others will take on more cover.
European insurers will probably stay away from Myanmar at first, but the Japanese could be interested, said Fitch Ratings' Asia Pacific head of insurance Jeffrey Liew.
"You see insurers like Aviva (>> Aviva plc) pulling out of their non-dominant markets," he said. "European insurers are still exposed to sovereign debt crises in their home markets and need to preserve capital."
"The Japanese could be more aggressive. You see them venturing into Southeast Asia, especially Indonesia," Liew said, adding, however, that while foreign insurers may secure licenses they will be cautious about committing resources in a market with such a recent fractious past.
Both Sompo Japan Insurance Inc and Tokio Marine & Nichido Fire Insurance Co Ltd <MILEAA.UL> have representative offices in Yangon, according to the Insurance Directory of Asia 2013, published by the Asia Insurance Review.
Before the former military government launched a sweeping nationalization in 1963, there were more than 70 local and foreign private insurance companies operating in Myanmar. Only the government-owned Myanma Insurance Enterprise has been doing insurance business since then.
In the year to end-March, Myanma Insurance wrote gross premiums totaling 24.1 trillion kyat - around $28 million at official exchange rates.
(Reporting by Aung Hla Tun in NAYPYITAW. Additional reporting by Clare Baldwin in HONG KONG. Editing by Jason Szep and Ian Geoghegan)
By Aung Hla Tun