Bangkok Insurance (BKI) has lowered its forecast for premium growth this year from 15 per cent to 5 per cent as it does not see many positive factors on the horizon.
In the first quarter, BKI’s total premium income dropped by 8 per cent year on year to Bt3.89 billion.
Its net profit surged by 61 per cent to Bt627.2 million, but that was from a low base, said president Panus Thiravanitkul.
BKI will attempt to keep profit growth this year similar to last year’s, to Bt1.75 billion.
The company has enjoyed double-digit growth in each of the past three years.
In 2013, premium income expanded by 20 per cent to Bt15.55 billion.
“Our premiums might grow in line with the industry, at 5 per cent. But without a functioning government this year, the figure might be lower than that,” he said.
Since last October, political unrest has had a severe impact on the economy, which has been reflected in lower vehicle and property sales.
In the insurance industry, premiums from auto policies represent 60 per cent of the total, and when the sales of new cars slow, premium income slows as well, he noted.
Domestic car sales in the first quarter dropped by 46 per cent year on year, and BKI estimates fewer than 1 million new vehicles will be sold this year.
BKI expects gross domestic product this year to expand by 1.5-2 per cent, and such low growth will be a drag on the insurance industry, he said. Apart from the slowdown in car sales, commercial banks have become more cautious with lending, a key indicator of business expansion, especially in property and private investment.
In the first two months, the insurance industry grew by 3 per cent to Bt34.5 billion with a loss ratio of 50 per cent, while the motor-insurance segment grew only 0.8 per cent, with a loss ratio of 59 per cent.