Thailand: Non-life industry urged to innovate as it approaches turning point
Source: Asia Insurance Review | Feb 2016
The Thai non-life insurance industry is nearing a turning point because of slower economic growth, and needs to innovate, according to Mr Arnon Vangvasu, President of the Thai General Insurance Association.
The sector, in which motor insurance plays a critical role, saw a fall in auto sales over the past two years. The sector enjoyed strong growth in 2012 and 2013 due to the previous elected government’s first-car-buyer tax-break scheme. However, auto sales in 2014 and 2015 fell sharply because of the market saturation resulting from the scheme, reported The Nation newspaper.
The non-life sector was able to maintain premium income growth in 2014 and 2015 because some insurance companies cut prices and increased commission rates for agents.
Mr Arnon said competition in the insurance industry must change, and pricing with high commissions should not be used as a strategy by operators. The Thai insurance industry also faces new regulations forcing operators to increase their capital, which will have an impact on profits.
The Association said insurers should seek innovation to face market challenges, including permitting transactions on digital platforms, especially smartphones, to reduce expenses. The Association will spearhead the establishment of a digital system for non-life insurers, beginning with motor and personal accident insurance plans.