Insurance business under transformation

Consumers have more knowledge and can select services best suited to their needs. Insurance companies have to think of new services to respond to demand. 

In this atmosphere, the Insurance Department has studied how to give added value for the benefit of society and the economy.

Loan insurance covers risks arising from providing loans. Autoloan insurance is not a new product and many people will be familiar with mortgage insurance. Both have the same principle in providing cover for the borrower.

In cases where the insured person dies, loses an organ or suffers permanent infirmity from an accident or illness, the insurance company will pay compensation at an amount equal to the outstanding debt under the loan contract. Customers are mainly people who have hirepurchase contracts with financial institutions, both banks and nonbanks.

At present, many companies offer this service for auto loans. It has had a good response because hirepurchase customers are aware of the consequences that may arise from death and infirmity. They need not worry about the outstanding debt. When compared to the average term of three to five years for hirepurchase contracts, the cost of loan insurance is not much considering the level of cover.

Some financial institutions have autoloan insurance as an additional condition for customers who apply for loans. If borrowers lose the capacity to pay instalments, those institutions will certainly get their money back. The insurance premium may be included in the instalments to ease customers' upfront expenses.

In the future, people who are looking for cars will consider loan insurance from many companies in addition to considering cars and financial institutions. In case of unexpected circumstances, loan insurance will help you and your family to pay the outstanding debt. Even though you may not know the future, you will be able to manage contingent risks. Do not forget to ask for informa¬tion from institutions about the rights and benefits provided by loan insurance.

Hire-purchase operators should pay more attention to this kind of insurance. It may seem not to be worth managing for financial institutions but it can be regarded as a duty in offering the best service to customers while improving the loans business in Thailand.