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Thailand Insurance Report Q1 2012
Business Monitor International, Jan 2012, Pages: 92
Business Monitor International's Thailand Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Thailand's insurance industry.
By most standards, Thailand would rate as a medium-sized but rapidly growing insurance market that is undergoing transition. For most of the year, the newsflow has highlighted the rapid (double-digit) growth in premiums in both the non-life and the life segments. In the life segment, the major players have introduced new products, actively sought to boost the productivity of their agency networks, expanded bancassurance partnerships and/or developed other channels. As far as BMI can see, though, most of the growth is coming from increased sales to the wealthiest 25% or so of the population (many of whom are ethnic Chinese and most of whom live in or near Bangkok). The growth does not seem to be fuelled by growing numbers of first-time users. In short, life insurance is developing further as a (already quite important) conduit for those households who can afford it.
However, in the short term, even the reasonably wealthy are finding it difficult to pay premiums for life insurance. The massive flooding in and around Bangkok has disrupted incomes. The insurers have had no alternative but to extend grace periods for non-payment of premiums.
The main challenge for the fragmented and, relative to the life segment, less dynamic non-life insurers is as small organisations in most countries, non-life penetration changed little from 2006 to 2010. Premiums broadly rose in line with nominal GDP over that period. Until there is a wave of consolidation, BMI doubt that penetration will rise dramatically. In the short-term, the non-life companies face a looming challenge in that some reinsurers are – in the wake of the recent flooding – wary of underwriting Thai risks. It is a certainty that the reinsurers who are prepared to provide cover in early 2012 will be lifting their prices and rates – and by a substantial amount. In many of the insurance markets that BMI has surveyed in the last three months, insurers have been able to pass on to their clients higher costs for reinsurance that were the consequence of massive catastrophes in Japan, Australia, New Zealand and elsewhere. It is not clear to us that the Thai insurers will be able to do this.
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