Political unrest bites into insurance and credit-card spending

Economy January 29, 2014 00:00

By Sucheera Pinijparakarn


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Prolonged political unrest, and the "Bangkok shutdown" in particular, affected consumer spending on insurance and via credit cards in the first three weeks of the year.

At Allianz Ayudhya Assurance, premium income during the period slowed as many customers delayed their decision to buy life insurance.

Moreover, some potential customers do not have the time to listen to the details of life-insurance products from telemarketing staff, said Bryan Smith, president and chief executive officer of the local unit of the German insurer.

The growth rate of its premium income this year will slow from last year’s level because of economic and political uncertainties, he said.

Allianz Ayudhya Assurance yesterday announced its business direction and premium projections for 2014, even though the company has not yet announced its financial results for last year.

Smith told the media early last year that gross written premiums (GWP) in 2013 were projected at Bt25 billion. The company this year targets GWP of Bt27.5 billion, which would represent 10-per-cent growth from the 2013 projection.

Although the political tension hit consumer sentiment in the first three weeks, life insurance continued to grow because the penetration rate is only 30 per cent in the Kingdom, he said.

Allianz Ayudhya Assurance has many distribution channels for selling insurance products. The company this year will strongly focus on the agencies to reinforce the life and health protection segment, as its sees high growth potential in this category.

It aims to become the local market leader in the health and life-protection segment.

Premiums from protection products climbed to 47 per cent of total premium income last year, from 37 per cent in 2012, said the company chief.

Agency business is the insurer’s major premium generator at more than 50 per cent, the channel being suitable for promoting life and health protection. Meanwhile, bancassurance is the main channel for promoting savings and investment insurance products.

Allianz Ayudhya Assurance will add 3,000 agents this year to its 12,000-strong network, and is improving the structure and benefit scheme to encourage more agents under its transformation-agency channel programme, Smith said.

The company targets new-business premiums worth Bt6.6 billion this year, with half accounted for by life and health protection insurance.

Allianz Ayudhya Assurance hopes GWP from the agency channel this year will come in at Bt15 billion, followed by bancassurance with Bt4.3 billion, and Bt7.5 billion from direct marketing.

At Kasikornbank, meanwhile, spending through its credit cards in the first three weeks of the year expanded 19 per cent, compared with 30 per cent in the same period last year.

The market grew by only 13 per cent in the period, lower than the bank’s expectation, executive vice president Chatchai Payuhanaveechai said yesterday.

Businesses related to tourism showed a significant slowdown in credit-card spending. In the first three weeks last year, business in the segment expanded 52 per cent, but in the same three weeks this year, it rose by just 9 per cent.

Credit-card spending on hotels was flat, compared with 21-per-cent growth in the same period last year, he said.

Overall cash advances of Kasikornbank credit cardholders during the period came in at Bt1.59 billion, higher than the Bt1.38 billion posted over the same three weeks last year.

This reflects more demand for cash after a slowdown last year due to the high level of household debt, Chatchai said.