Growth below forecasts as spending dips

Growth in the life-insurance industry is not meeting expectations, Muang Thai Life Assurance president Sara Lamsam said yesterday.

The growth rate originally forecast for the industry this year was triple that for gross domestic product (GDP). However, in the first five months premium growth was only 13 per cent. Both the Finance Ministry and the Bank of Thailand are forecasting GDP growth of 5-6 per cent this year.

Sara believes the industry can at least maintain the growth achieved in the first five months, or double that of GDP, thanks largely to recent tax incentives allowing deductions from taxable income of up to Bt100,000 for life-insurance purchases.

Sara said although the situation was not yet serious, there were already signs of an economic slowdown in the form of late renewal payments.

However, Muang Thai is faring better than the industry average. Its renewal premiums grew 31 per cent to Bt5 billion, and it achieved growth of 30.2 per cent in the first half of the year. Its total premiums have reached Bt8.5 billion. Despite inflation, the company has resisted raising premiums.

Sara said his company would benefit from its partnership with Kasikornbank once the Deposit Insurance Act came into effect and ordinary bank deposits were guaranteed only up to a limit of Bt1 million per account by 2012. In the first half of this year, Muang Thai's growth in bancassurance sales was already 60 per cent, compared with 12 per cent in agency sales.

Sara said recent rises in the rate of inflation and likely interest-rate hikes would not affect company investments.

"Because of the [long-term] nature of our business, 80 per cent of our investments are in bonds, and government bonds make up more than half of the portfolio," he said, adding that equity accounted for only 5 per cent of investment and lending another 10 per cent.

In terms of marketing, Muang Thai has been branching out into other forms of customer services. Yesterday, it launched a personal-secretary campaign, in which any Muang Thai customer with a Smile Club card can have the luxury of a personal secretary.

It has also been forging a rapport with senior citizens' organisations, such as the Old People Playing Young and the Senior Artists' Association, hoping to win the hearts of the elderly.