The insurance sector in Thailand returns to high growth


Given its low penetration rates, ageing society and the trend towards increased liberalisation, the Thai insurance sector has significant potential and growth is expected to be steady in the coming years. Thais are becoming more interested in savings and wealth-related products, and over time it is also likely that they will have a better understanding of the need to cover risks. Together, these factors could mark a tipping point for the industry.

Still, balancing the positive trends are several factors weighing on the sector. The nation’s relatively weak economy, which has made insurance less affordable, is leading to lower than normal premium growth. The sector is also somewhat mature in certain segments. Over the next decade, the Thai insurance market is expected to grow at a slower pace than in the past, but the rate is still comparatively high, with gross written premiums rising on average 8.3% a year through 2026, according to Allianz.

Ups & Downs

Over the past 15 years, the insurance business in Thailand has been volatile, with periods of both exceptional expansion and near contraction. In the early part of the millennium, the non-life premium growth rate was high, at 13.87% in 2002, but it declined over time, falling to 3.7% in 2009. It then spiked over the next few years, driven up by the 2011 floods and the first-time car-buyer programme, which was initiated in 2012. The rate of growth peaked at 28% that year. Then, political instability, the slowdown in economy and the rise of private debt took their toll on the sector. Premium growth rates plunged – 1.13% in 2014, 1.9% in 2015 and an estimated 2.2% in 2016, which is lower than GDP growth of 3.2%. The expectation is that growth will return to the mid-to-high single-digit range over the medium term, with non-life premiums more than doubling to about BT600bn ($16.9bn) by 2023.

Life & Non-Life

Non-life business has grown slightly faster than life in recent years. The compound annual growth rate for the former was 12.8% from 2009 to 2015, against 11.3% for the latter. However, the life side of the industry is far larger – more than double the size of general insurance – and its growth has been more consistent. Direct life premiums rose at double-digit rates from 2009 to 2014, only dropping to single digits in 2015 at 6.8%. The Thai Life Assurance Association anticipates growth in 2016 at 7%, down from its previous estimate of 9%.

Motor Coverage

The non-life segment is benefitting from a recovering economy, but at the same time, it is held back by the constrained spending power of Thai consumers. Much of the trouble on the non-life side comes from the over-dependence on motor coverage. It is by far the largest line, with BT120.4bn ($3.4bn) of direct premiums recorded in 2015. That was more than half the business in the segment, which totalled BT209.3bn ($5.9bn).

Following the end of the first-time car-buyers’ programme and beginning of a period of general economic uncertainty, sales of motor insurance have been stuck at about the same level for the past three years. After a 38.5% jump in 2012, car sales fell 7.4% in 2013, 33.7% in 2014, 3.6% in 2015 and an estimated 10% in 2016. Economic growth has been under 3.5% during that time (and as low as 0.8% in 2014). Insurers, however, say that car sales could rise in 2017, as customers who bought vehicles under the first-time scheme are now qualified to buy another.

Other segments are also facing weakness. These include industrial, with growth falling 6.4% in 2016 and personal accident, down 5.5%. Meanwhile, the fastest growing lines were ordinary life (up 6.5%) and group life (up 2.5%). Overall, the life and non-life insurance market expanded by 4.5% in 2016.


Certain performance metrics are quite strong. Insurance penetration has been rising, from 3.09% in 2002 to 5.49% in 2015. Of the 2015 total, 3.94% is in life and 1.55% is in non-life. Insurance density grew from BT2830 ($80) to BT11,043 ($311), of which BT7930 ($223) is life and BT3113 ($88) is non-life. The loss ratio has been consistently around 50%, but spiked to 176.41% during the 2011 floods.

Demographic Boost

One positive factor affecting the life sector is the change happening in the nation’s demographics. Thailand is ageing quickly. The country has the oldest population in South-east Asia, with the proportion of people over 60 expected to rise from 14.78% in 2016 to 25.12% in 2030. Presently, the country does not have the social security apparatus to care for its future elderly population, at least not at a level they would like and expect. The insurance sector, through the introduction of savings products, could help make up the difference.

However, the environment is challenging for the insurers. While an ageing society can be a good for sales, it can be a drag on investment, as an older Thailand will be a slower growing Thailand. Furthermore, because of regulations on the sector, insurance firms cannot easily invest abroad to make up for the lack of domestic opportunities. General economic uncertainty has also weighed on portfolios. The low interest rate environment has made it difficult for insurers to find suitable assets for their portfolios. They are starting to push more investment-linked products in the face of weak fixed-income returns.

International Participation

Insurance has existed in Thailand since the early 20th century, when Sun Life of Canada set up operations. Still, for the first half of the century, there was only limited expansion in the region. Few policies were written, given the lack of demand and the lack of an understanding of the product, and regulation of the industry was sparse. Indeed, Sun Life exited the market in 1949. The situation became so volatile, in fact, that two insurance companies – Capital Life and Oriental Life – collapsed in the 1960s. Business started to take off after a modern insurance law was issued in 1967.

The sector is now large, deep and diverse, with 62 companies in the non-life sector. The largest non-life players in the country are Viriyah Insurance, with a 2015 market share of 15.5%; Dhipaya Insurance, at 10.8%; Bangkok Insurance, at 7.3%; Muang Thai Insurance, with 5.3%; Syn Mun Kong Insurance, 4.7%; Safety Insurance, 4.3%; Tokio Marine Insurance, 3.6%; Southeast Insurance, 2.9%; Thanachart Insurance, 2.9%; LMG Insurance, 2.7%; Chubb Samaggi Insurance, 2.5%; and Mitsui Sumitomo, 2.4%.

As of 2015, there were 25 foreign non-life companies operating in the country. These firms had a total share of 30.8% of the market. The five largest were Safety Insurance, Tokio Marine Insurance, LMG Insurance, Chubb Samaggi Insurance and Mitsui Sumitomo. On the life side of the business, a total of 12 foreign insurers were operating, with a total market share of 49.3%. The larger players were led by AIA, with a 21.7% share; Krungthai AXA, 10.3%; Allianz Ayudhya, 5.4%; Prudential, 3.3%; and FWD, 3.2%.

Ripe For Consolidation

The Thai market is both fragmented and concentrated, with many players, on the one hand, and market share concentrated into the hands of just a few, on the other. The top 10 non-life companies took in 60% of the premiums in 2015, up from 53% a decade earlier.

Distribution Channels

In terms of distribution, the broker-agent model dominates, with brokers handling 56.92% of sales in 2015 and agents 14.62%. Bancassurance represented 12.26% and internet sales 0.05% (down from 0.73% in 2014). Agent numbers have held steady at around 300,000 since 2011, while broker numbers have increased over that time, from 134,000 in 2011 to 203,000 in 2015. However, according to David Korunic, CEO of Krungthai-AXA Life Insurance, mobile and digital technologies could disrupt the hold agents have over the market.

“Thai insurers want to see faster development of regulations for digital channels. While life insurance is very much agent-based in Thailand, there is a lot of growth in mobile and retail-related channels, especially with regard to enhancing mobile payments and services that increase customer convenience.”

Sector Developments

Health insurance is becoming more of a focus, with higher demand expected from white-collar workers who face health issues from time spent at the office and unhealthy lifestyles. Firms, such as Cigna, are active in developing relevant lines, and AIA is working to grow its critical-illness business by offering higher levels of coverage that kicks in with shorter wait periods.

The non-life sector has proposed to the Ministry of Finance that private insurers play a role in the provision of health coverage to civil servants, as it believes that its involvement would help the government better manage the risks associated with that coverage. Currently, claims are paid directly by the government, but only about BT60bn ($1.7bn) is budgeted to settle BT71bn ($2bn) in claims. Claims could rise as high at BT160bn ($4.5bn) in a decade.

Additionally, the Thai General Insurance Association has called for the development of a national reinsurer. According to the association, such an enterprise would help the sector improve its negotiating power on the international market. A national reinsurer would be especially useful as the government works to move the civil servant health coverage to the private sector. The concern is that claims would be significant and that premiums charged by the international insurers would be high.

While the sector has been improved considerably in recent years, further development is needed to prepare for regional liberalisation of the industry under the ASEAN Economic Community in 2020. In other markets in ASEAN where insurance is more established, underwriters work at a higher level in terms of finances, skills and performance. The regulator is particularly concerned about the high number of insurers in Thailand and the fact that many remain small and have weak balance sheets, increasing risk. It is hoped that capital requirements will drive consolidation in the sector (see analysis).

Technology Enabled

Technology is expected to become one of the major drivers of insurance business in the future. Insurers believe that the adoption of new methods of marketing, distribution and payment will help generate sales while at the same time keeping premiums in check. They are starting to use the internet and apps more and are working to develop offerings suited for sale over digital platforms. At the moment, not much coverage is sold online, as the products that can be delivered over the internet must be simple, with lower premiums.

In addition to basic insurance functions, technology will be used for value-added services. Developments will include the introduction of financial-needs analysis programmes, which help customers better understand how insurance works with their overall portfolio of investments. Viriyah Insurance said that it is working on a mobile app of its own, as it would help the company develop in terms of premiums and customer service. Muang Thai Life Assurance is investing between BT200m ($5.6m) and BT300m ($8.4m) a year on new technology. Sector-wide, the government’s new PromptPay platform is being used to settle claims under the rice crop insurance scheme. Rice crop premiums are paid by the state.

Sompo Insurance, meanwhile, is looking at the utilisation of digital channels to improve its retail customer base. The company is hoping to expand from its traditional market of Japanese corporate clients and start to focus on individual lines in Thailand, with the hope of maintaining premium growth at 15% a year and becoming one of the top-10 insurers in the country by 2020. It sees the retail side of the business growing 15-18% annually, and the corporate side expanding 5% a year. The company plans to start offering motor policies, as that is the largest line in the sector, and it is building its travel insurance line.

Start-ups are also providing insurance solutions. The Claim Di app has been available since 2014 and is used by 38 insurance firms in Thailand. It allows people involved in traffic accidents to transmit their information and photos of the scene directly to the insurer and then leave immediately if the accident is not serious. In many cases, claims are paid within days without anyone having to see or speak with a representative from the insurance company; photos are time stamped and verified by GPS, reducing the chance of fraud. The app also provides additional valued-added services, such as roadside assistance.


In early 2017 e-insurance regulations were issued by the authorities. Effective in August, the rules will cover all steps of a possible insurance transaction, including sales, marketing, and premium and claims payments. They clarify who may use electronic channels and establish a number of safeguards. These include: payments by electronic means must be made directly to insurers; the wording of policies sold electronically must be approved by the regulator; all policies sold electronically must be confirmed with a phone call or an email within seven days; policies must have a 15-day free-look period, in which the insured can cancel (compulsory motor and travel excluded); and e-signatures must comply with the Electronic Transactions Act of 2001.

New Regulations

The sector is regulated by the Office of Insurance Commission (OIC), which is under the Ministry of Finance. Policyholders are protected by a General Insurance Fund and a Life Insurance Fund, but claims are limited to BT1m ($28,000). Some support functions of an insurer may be outsourced, including audit, accounting and IT, but core functions must remain in-house. The minimum capital requirement for life companies is BT500m ($14m) and for non-life BT300m ($8.4m), while risk-based capital is being implemented. New branches and subsidiaries are permitted, but it is unlikely that the OIC will allow for any new licences as the sector is crowded and the regulator would prefer there to be fewer insurers.

In early 2016 the OIC published drafts of a new Life Insurance Act and a new Non-Life Insurance Act. It has also, in recent years, published amendments to the existing acts as well as notifications liberalising the procedure for foreign investors buying into and entering the market. The drafts of the new insurance acts allow for up to 49% ownership of Thai insurers by foreign entities without any special approval. While Ministry of Finance approval is still needed above that level, the bar for receiving that permission has been lowered. The draft laws also allow foreign insurers not licensed in Thailand to sell policies in the country, if they are from a jurisdiction with which Thailand has a bilateral treaty. These companies will still have to register policies with the OIC.

The new laws would require an acquirer buying more than 5% of a Thai insurer to notify the OIC post-acquisition, require any single shareholder owning more than 10% of an insurer to get the approval of the OIC and require insurers notify the OIC within 15 days of any changes in their articles of association, memorandum of association, directors or management personnel, according to Norton Rose Fulbright. The new laws add criminal penalties for directors and managers if the act is violated and they cannot prove they were not involved in committing the offence.


The OIC is working with the Thai Bankers’ Association to develop guidelines for the sale of insurance products at banks. They are concerned that some customers may be confused and think they are getting a deposit product when in fact they are buying insurance. The OIC receives about 4000 complaints a year about bancassurance, and about half of which regard misunderstandings about the product. A total of 12 guidelines have been formulated to address the problem. Among other things, the regulator and the association are calling for the segregation of sales channels and a 15-day period in which a customer can reconsider policies purchased at banks. The rules also ensure the sale of insurance is not tied to products such as loans.


The Thai General Insurance Association has expressed concerns about other non-insurance players operating in the non-life sector. It argues that unregulated firms such as cooperatives offering health protection plans could endanger customers. It notes that because insurers have capital requirements, their policies are more expensive, but as a result of these capital cushions, the licensed insurers are in a better position to pay claims during difficult times. Hospitals and cooperatives are not structured this way, and while they can offer coverage, it does not provide the same client protection.

Thai hospitals continue to absorb the cost of uninsured foreigners receiving treatment in Thailand. These facilities are obliged to care for all patients in need of emergency care, but in many cases the visitors are unable to pay. This is especially a problem in tourist centres such as Phuket. The government is still working on developing clear protocols for dealing with uninsured visitors. For a number of years, Thailand has considered requiring insurance for tourists prior to their arrival, but this has been resisted on the grounds that it could discourage visitors.

Overseas Activity

Several local players are looking to expand abroad. Bangkok Insurance, for instance, is discussing a return to Vietnam. The firm operated as a joint venture there a decade ago, but left due to disagreements with its partners. The company sees renewed potential there as the government’s stance towards foreign participation has become more positive. The company already has a 45% stake in Bangkok Insurance (Lao).

Meanwhile, Bangkok Life has received approval from the Cambodian regulators to set up operations, where demand is seen as high. It has established an entity known as Bangkok Life Assurance (Cambodia). The Thai parent has a 52% stake in the subsidiary. In April 2016 Sovannaphum Life Assurance, a Cambodian joint venture involving Muang Thai Life, opened its first branch, and plans to offer loan protection. The Thai insurer also has a joint venture in Vietnam, MB Ageas Life, in which it has a 10% stake.

Entry & Exit

While many see great potential in the Thai market, some firms are exiting the field there. For example, Siam Commercial Bank Selling Insurer (SCBSI) is selling its life insurance business, in what could be the largest such transaction in South-east Asia. Possible acquirers include FWD of Hong Kong, AIA Group and Manulife.

The total value is estimated at $3bn. SCBSI had been talking of selling a 49% stake for some time, but is now looking at a full divestiture given the change in approvals for foreign investors. Thai insurance assets are particularly attractive to Japanese and Western insurers, due to low growth and low returns in the home markets. Despite the high price, some companies have been willing to pay a premium to get access to Thai market.

Meanwhile, Sun Life of Canada is looking to, re-enter Thailand as part of expansion plans. It currently operates in China, Hong Kong, India, the Philippines and Malaysia. Expansion will occur through organic growth and acquisition. Another global player, Allianz, is reported to be discussing additional investment in the Thai non-life sector. It is already invested in the market through Allianz Ayudhya Assurance, which is 20.17% owned by Sri Ayudhya Capital.


While the growth in the Thai insurance market has flattened out in recent years, and the projections for the near term indicate slower than historical growth over the next decade, the market is healthy, well regulated and increasingly open. It is a sector of opportunity for foreign institutions and local players, especially those willing to provide innovative solutions. As the insurance culture develops in Thailand, the business will become a better one. Renewal rates will start to converge with regional averages while efficiency could improve. Technology will help significantly in lowering costs and increasing the attractiveness of insurance products.


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The Report: Thailand 2017

Insurance chapter from The Report: Thailand 2017

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