Thailand Insurance Report Q1 2014
As of late 2013, most of the trends in Thailand's insurance sector are positive. The economic environment is generally favourable. The resilient non-life companies have been able to pass on (substantially) increased reinsurance costs. Meanwhile, the life segment is growing steadily thanks in part to initiatives by the major life companies in relation to product development and distribution.
Key Insights And Key Risks
BMI continues to rate Thailand as a medium-sized, but rapidly growing insurance market that is undergoing transition. Both segments are rising at double-digit rates. In the life segment, the increase in business is coming - as far as we can see - from the wealthiest 24% of the population that already use life insurance. Over the last year or so, we have highlighted initiatives from the major companies such as: the development of new products; expanded agency networks; increases to agent productivity; bancassurance deals, and the development of direct sales and other distribution channels. In short, life insurance is developing further as an important conduit for those households who can afford it. In the meantime, the revised mortality tables mean that life insurance customers will probably enjoy a reduction in rates and premiums over the next year or so.
As of late 2013, it is clear that floods of 2011 have had a profound impact on the non-life segment. Substantial hikes in reinsurance costs have been passed on to customers by way of across-the-board, and large rises, in prices and rates in all lines (including motor, which accounts for about half of all premiums written). Some of the non-life insurers' corporate customers have clearly had problems in paying for flood cover, if they have been able to get it at all, in 2012. However, the non-life segment as a whole has been boosted by Thailand's economic recovery in the wake of the floods. Non-life penetration has clearly shifted upwards, having been kept down by the competitive pressures of a fragmented segment for years.