Thailand’s insurance sector sees 4.5% growth, aiming for 1 trillion baht by 2026

The insurance sector in Thailand has seen a robust expansion of 4.5%, with the Office of the Insurance Commission (OIC) projecting insurance premiums to hit the 1 trillion baht (US$28,184,510,000) mark by 2026, a significant leap from the present 800 to 900 billion baht figure. Such an outlook was shared by Chuchatr Pramoolpol, the secretary-general of the OIC.

Chuchatr revealed that the insurance industry had weathered a tough couple of years due to the pandemic, leading to four non-life insurers losing their licences. However, the sector is now on a revival path, with a handful of companies even boasting margins of 1 billion baht.

In the year 2023, gross margins from life insurance came up to 28 billion baht, while non-life insurance margins were at 14.4 billion baht. Direct premiums, encompassing both life and non-life sectors, ranged between 891 to 927 billion baht.

Life insurance premiums saw a growth of 3.92% from the previous year, while non-life insurance premiums experienced a slightly higher increase of 5.16%. The average growth for both segments was pegged at 4.5%.

The OIC is optimistic that the total premiums will reach the 1 trillion baht milestone by 2026, reported Bangkok Post.

Chuchatr noted that the pandemic served as a wake-up call for both the industry and the regulators, emphasising the need for an early warning system to identify potential vulnerabilities.

Capital reserves

He also touched upon the General Insurance Fund’s (GIF) capital reserves, suggesting that it may require adjustments. However, this would only apply to companies that do not make consistent contributions to the fund.

On the issue of SMK, a firm that failed to maintain adequate capital reserves for Covid-19 claims, Chuchatr explained that the OIC had to invoke Section 52 of the Non-Life Insurance Act. This allowed them to assume control of claims payments and instruct SMK to cease accepting new applicants. This action was taken after the Central Bankruptcy Court dismissed SMK’s rehabilitation petition.

The OIC has not yet revoked SMK’s licence, providing the company with a grace period to address its liquidity issue.

Chuchatr added that there are around 600,000 outstanding Covid insurance claimants, whose full payment could take up to six decades. The GIF is exploring methods to speed up this process.

The Covid pandemic compelled the OIC to recalibrate its approach towards the provision of emerging disease insurance. This involved risk mitigation measures such as limiting liability and implementing a risk monitoring system.

The popularity of health insurance is surging due to the ageing population and a significant 8 to 9% increase in medical expenses last year. The OIC is promoting health insurance policies for older individuals who have recovered from previous illnesses. This group typically faces difficulties obtaining health coverage for past ailments.

Chuchatr also mentioned the growing demand for electric vehicle insurance, which used to be costly but has now become affordable due to heightened competition.