Thailand: Non-life sector expected to see slower growth in 2014

Thailand’s non-life insurance business could grow at a slower rate next year because of the current decline in the sale of auto and industrial all risk policies, according to the Thai General Insurance Association (TGIA).

The association estimates that the non-life insurance business will grow by 10-15 percent next year compared with 15 percent this year, reports The Nation newspaper citing Mr Anon Vangvasu, TGIA president.

The share of motor policies to the overall non-life insurance market was boosted to 60 percent by the government’s first-car scheme. Now that the scheme has ended, motor insurance will shift down a gear, he says.

According to the Kasikorn Research Centre, new vehicle sales are expected to fall by 10-15 percent to between 1.1 million and 1.7 million units next year.

Industrial all risk (IAR) premiums are also expected to decline next year after increasing over the past two years when businesses were worried about natural disasters after the 2011 Bangkok floods. The outlook for IAR has changed because government plans for a mega water management scheme and other massive infrastructure investments have been delayed by political tension, denting demand for IAR policies.

TGIA says that insurers must focus on reducing their expense ratio, instead of their gross margin, to meet tougher competition. To this end, non-life insurers plan to use online sales to reduce operating costs. The association will discuss with the Insurance Commission about allowing e-policies. A study by the association has found that 50 percent of costs can be saved through issuing e-policies because a key cost for insurers lies in distributing hard-copy policies and premium receipts. TGIA hopes that e-policies can be implemented in the second quarter of next year.