An obscure NGO is providing life insurance coverage to low-income individuals, mostly garment workers, offering a financial safety net for the families of its policyholders, but triggering the concern of insurance regulators who take issue to its unlicensed operations.

The TYGi Save Death Association launched operations in late 2015 and now counts 600 “members”, or policyholders, the majority of whom are garment workers between the age of 30 and 45, according to Nhim Samnang, the NGO’s general manager.

He said the association operates by pooling the funds of its members so that they “can help each other”.

Members pay as little as $4 per month and can chose a coverage period from three to 15 years. If the member dies within this period, their family will receive a payout – $1,500 in the case of a three-year policy with a $4 monthly premium. If not, the full amount is returned to the member, with interest.

Nearly a year into operation, the micro-insurance scheme remains untested. No members have died, and so no claims have been submitted, Samnang said.

The association was established by businessman Yun Sophea, the chairman of the Tycoon Global Investment (TYGi) Group, whose six subsidiaries include a private equity firm, rubber plantation, microfinance institutions and an unlicensed derivatives trading outfit.

On Thursday, TYGi Save Death Association announced that it had signed a memorandum of understanding with rural credit operator Khmer Development Organisation (KDO) aimed at assisting low-income individuals unable to afford TYGi life insurance. Under the agreement, KDO will extend credit to these individuals to be used toward their monthly policy payments.

Huy Vatharo, chairman of the Insurance Association of Cambodia (IAC), expressed concern about the NGO’s life insurance scheme, which he said was being operated without any oversight.

“It is risky for members if the association is conducting insurance activities without holding a licence,” he said yesterday.

“If they collect money from members and decide to run away someday, the members will lose.”

In Meatra, director of the Ministry of Economy and Finance’s insurance and pension department, said he had not received any information about TYGi Save Death Association, but insisted that it must be licensed in order to offer any insurance product.

“If [the association] is doing anything without having approval from the sector’s regulator, it is negatively affecting the industry,” he said, promising to investigate the issue.

Samnang conceded that TYGi Save Death Association did not have an insurance license, but said if any members had concerns about the safety of their investments, they could cancel their policies and receive a refund.

“If the members worry, they can submit to withdraw their money and then the association will return the money to them,” he said, “but they need to respect the criteria.”

He said that refunds would not be given until the insurance policy matures. In the case of a policy with three-year coverage, “they can get their money back, but only if they wait until the third year”.