Thailand:Insurers expected to place greater focus on innovation

Despite a COVID-19-driven economic contraction in 2020 in Thailand, the country's non-life insurance market still managed to expand, driven by strong growth in the health segment, according to a new AM Best report.

With the pandemic’s negative impact on Thailand’s exports and tourism, the country’s real GDP shrank by 6.1% in 2020, while the central bank reduced its interest rate by 75 basis points to a historic low of 0.5%, as part of economic stimulus measures.

In the new Best’s Market Segment Report, “Thailand Non-Life Insurance Market Shows Resilience Yet Challenges Remain,” AM Best states that the country’s non-life companies recorded an overall underwriting profit of THB12.5bn ($0.4bn), which rose by approximately six times as compared with 2019, driven by premium growth along with lower expenses and claims. The non-life market expanded by 3.5% to THB253bn in terms of direct premium written (DPW).

Health insurance, which has grown steadily in recent years, posted a 44% expansion in 2020, with the spike in demand underpinned by increasing health awareness in light of the pandemic.

Motor insurance, which is the largest line of business and accounts for more than 55% of total DPW, grew by 1.4%. AM Best notes that the decrease in automobile sales and weaker consumer purchasing power in 2020 has not fully translated to a decline in motor premiums, as the potential negative impact was offset by some rate hardening.

Government-imposed COVID-19 containment measures have catalysed digitalisation and innovation in Thailand’s insurance industry, as companies jostle for a share in the kingdom’s highly competitive and developing non-life market. Despite a decrease in travel insurance demand, which usually is sold online, insurance sales via online channels doubled in 2020 as insurers sought to enhance digital platforms and tools to meet changing consumer behaviour.

AM Best expects insurers to place greater focus on innovation over the coming years. Digital transformation of the non-life insurance segment can help to raise operational efficiency, diversify distribution, as well as strengthen product development and pricing capabilities. AM Best expects growth in Thailand’s non-life segment to continue, supported by a positive 2021 GDP forecast of 2.6%. However, near-to-medium term economic recovery remains uncertain, with challenges likely to stem from managing the ongoing pandemic and Thailand’s ability to restart its tourism sector.

Source: Asia Insurance Review