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Non-life insurance may dip in '14

Decline in auto, industrial all risk policies expected

Growth in the non-life insurance business could be lower next year because of the decline in auto and industrial all risk policies, according to the Thai General Insurance Association.

Motor policies were driven to 60 per cent of the Bt205-billion insurance market by the first-car scheme. Now that it has ended, motor insurance will shift down a gear, association president Anon Vangvasu said yesterday.

The association estimates that the non-life insurance business will grow by 10-15 per cent next year compared with 15 per cent this year, he said.

According to Kasikorn Research Centre, new vehicle sales are expected to drop by 10-15 per cent to between 1.1 million and 1.7 million units next year.

Insurers have been focusing more on car insurance with limited coverage in line with the weakening in purchasing power.

Industrial all risk (IAR) premiums will also retreat next year after advancing over the past two years when businesses were worried about natural disasters after the flood devastation in 2011.

The association had been bullish on IAR based on positive factors such as the Bt350-billion water-management scheme and the Bt2-trillion infrastructure investment, but those government plans have been delayed by the political tension, hurting demand for IAR policies.

The situation forces severe competition among insurers, so they have to adapt to keep their edge and help sustain the market, the organisation says. Insurers must focus on reducing their expense ratio instead of reducing their gross margin to meet the competition.

The cost-to-income ratio is now Bt300-Bt400 per policy issued.

The association will help them by talking with the Insurance Commission about allowing them to issue electronic policies.

A study by the association has found that 50 per cent can be saved by writing

e-policies because the key cost for insurers is issuing paper policies and premium receipts.

The association hopes that the e-policy can be implemented in the second quarter of next year.


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