Global insurer Allianz expects life business to remain the major growth driver in the Thai insurance sector over the next decade, averaging around 9.3%.
Against the background of an ageing population, Thailand’s old-age dependency ratio is set to leap from 15.2% now to 52.5% in 2050.
Life insurance makes up 70% of total premium income in Thailand. This is in line with the results of a World Bank survey, in which 65% of adult respondents said they saved for old age, reported The Nation.
Dr Michael Heise, Chief Economist of Allianz SE Germany, the major shareholder of Allianz Ayudhya Assurance,said that since 2012, the insurance market has been losing some of its momentum.
For the fourth year in a row, premium income growth slowed in 2016, to 3.9%. According to preliminary figures, property and casual insurance shrank by 2.1% for the first time since 1999, while life insurance growth picked up slightly to 6.6%.
Premium income reached 4.9% of GDP in 2016, putting Thailand on par with Germany with respect to insurance market penetration.
Thailand’s economic growth will remain resilient, at above 3% in both 2017 and 2018, according to Allianz Economic Research’s latest analysis.
Dr Heiss said strong competitive advantages such as competitive prices and strategic location as well as rising foreign demand would support a rise in Thai exports and tourism-related revenues.
With public debt at 43% of GDP, the existing fiscal space will be used to support growth in the form of public investment. But lifting private confidence will be essential. For now, private expenditures are the main Achilles’ heel of the economy with limited growth of private credit, weak corporate confidence and low inflows of foreign direct investment.