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Long term Prospects remain Bright for Thailand’s insurance sector

Thailand’s greying population should not only drive the expansion of life policies but also increase prospects for health and medical insurance in Thailand’s insurance sector. Higher life expectancy in Thailand could also prompt more citizens to take out coverage.

Oxford Business Group



Increasing demand on the back of an expanding middle class and growing awareness of services will drive growth in Thailand’s insurance sector, though short-term prospects may be muted by a cooling of the economy.

Strong potential for growth in Thailand’s insurance sector stems from low rates of insurance penetration, which is 4.1% for life insurance and 1.7% for non-life insurance, according to the Thai General Insurance Association (TGIA).

Bright spot for Thailand’s insurance sector

Penetration rates have stayed low, even though the market has a relatively high number of players; some 57 insurers operate in the non-life segment, 90% of which are local.

The 10 leading companies account for more than 60% of total market share, with five players comprising roughly 45%.

In the life segment, meanwhile, 24 operators are members of the Thai Life Assurance Association, with a slightly higher foreign presence.


Higher life expectancy in Thailand could also prompt more citizens to take out coverage, spurring growth in premiums

The number of insurers could fall if local market regulator Office of Insurance Commission (OIC) follows through with a proposal to further enforce its capital adequacy ratios, already the fourth highest among ASEAN countries.

An increase in risk-based capital requirements could see some smaller operators subject to mergers or acquisitions by larger companies, or face difficulties competing in the market.

Favourable demographics and Demand on the rise

A Fitch Ratings report released at the end of last year found that the medium- to long-term prospects for the Thai insurance sector were strong, supported by increasing demand for coverage from an ageing population and rising levels of household wealth.

Favourable demographics and the sector’s distribution platform provide a solid foundation for life insurers, while companies in the non-life segment will likely see steady expansion in the medium and long term, although expansion this year could be muted due to a slowing of economic growth, Fitch said.

Thailand’s GDP expanded by 2.5% last year, coming in below the government’s revised 2015 forecast of 3.9%.

With the World Bank expecting growth of around 2% in 2016, there could be less enthusiasm for life insurance and other non-compulsory services if disposable incomes flatten.

Changing demographics will become increasingly important to bolster premiums in the insurance sector, according to Kheedhej Anansiriprapha, executive director of the TGIA.

“The insurance sector will have to adapt to Thailand’s ageing population to move forward,” he told OBG. “Seniors accounted for about 14.2% of the national population in 2015 and are expected to reach 25.1% by 2023.”

The greying population should not only drive the expansion of life policies but also increase prospects for health and medical insurance. Higher life expectancy in Thailand could also prompt more citizens to take out coverage, spurring growth in premiums.

Some Thai insurers are also looking to expand their footprint to neighbouring countries

A number of underwriters, such as state-owned Dhipaya Insurance and private firm Muang Thai Life Assurance, have opted to set up branches in Myanmar, Cambodia, Vietnam and Laos or have indicated an interest in extending their operations beyond their home market.

In addition to obtaining a licence to operate with a local partner in the Cambodian market, Muang Thai has formed a joint venture to establish a presence in Vietnam and opened a representative office in Myanmar.

Allianz Ayudhya is also looking further afield towards Laos, Cambodia and Myanmar. The firm has already formed a joint venture with the Ministry of Finance in Laos and aims to enter the Cambodian and Myanmar markets in the near future.

Much of this overseas expansion is linked to growing bancassurance ties in the domestic industry, according to Kheedhej.

“Insurers expand to neighbouring countries often in tandem with their associated banks,” he told OBG. “Dhipaya Insurance has followed Krung Thai Bank into Laos and Myanmar, while Bangkok Insurance is tied to Bangkok Bank and Muang Thai Insurance to Kasikornbank.”

Source: Solid prospects in Thailand’s insurance sector | Thailand 2016 | Oxford Business Group

With some of the industry’s most experienced analysts conducting on-the-ground research throughout the year, OBG provides its global readership with the business intelligence they need to stay ahead.



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