COMMERCIAL banks will soon be able to offer insurance policies to prospective customers over the phone and through the post, broadening their sales channels and putting them in more direct competition with brokers and agents.
Suthiphon Thaveechaiyagarn, secretary-general of the Office of Insurance Commission (OIC), said the regulator had agreed on an amendment of a draft OIC notification that liberalises the sales regime for insurance.
Currently, banks are allowed to sell insurance policies only at their branches and online. The reform unshackles the banks in their marketing of insurance. Insurance brokers and agents had been among those opposed to any changes in the sales regime. However, the OIC is yet to decide on whether to allow banks to set up mareketing booths for the sale of insurance to passers-by in public areas.
“The approval of this draft notification is aimed at upgrading the supervision of market behaviour involved in the offering of insurance policies in a way that will increase people’s confidence and trust and results in the fairer treatment of insurance policy-holders,” Suthiphon said.
After the OIC approval is given, the draft notification will be forwarded to the OIC chairman for an official signature that will enable the reform’s enforcement.
A source said that once the OIC’s approval is in hand, the banks can make the most of the increased channels to generate more insurance-based income, while consumers will reap the gains of the greater competition in the insurance market.
Currently, only agents and brokers can sell insurance policies over the phone. They had voiced their opposition to a change in the rules, citing concerns over how they would compete with the banks with their broad customer base gained through their deposit and lending activities.
Against this backdrop, the OIC had delayed making a decision on the regulatory change in order to reduce the impact on the brokers and agents.
Chuchatr Pramoolpol, OIC deputy secretary-general, said the agency forecasts that the value of insurance premiums will rise by 6.4-7.4 per cent to Bt871.04 billion for this year. Within this market, the value of premiums for life insurance is projected to increase 6.6-7.6 per cent to Bt640.08 billion and non-life insurance premiums are tipped to grow 5.7-6.7 per cent to Bt230.96 billion, he said.
Over the next one to two years, the value of total insurance premiums are forecast to rise to Bt1 trillion, on expectations of a sustained global economic recovery, rising exports, expanded manufacturing, and a recovery in private investment. Fairer income distribution across the country and the OIC’s market development measures would also play a role, Chuchatr said.
“There are bright prospects ahead for life insurance business, particularly through the growth in bancassurance,” Chuchatr said.
For the first quarter of this year, total direct premiums climbed 5.9 per cent year on year to Bt216.05 billion and accounted for 5.32 per cent of the nation’s gross domestic product.
Of the total, direct premiums from life insurance business advanced 6.79 per cent to Bt159.02 billion and direct premiums from non-life insurance edged up 3.5 per cent year on year to Bt57.03 billion. Some 51.6 per cent of life insurance was offered through bancassurance, while 42.3 per cent was made through insurance agents for the first three months of this year.
In 2017, about 49.7 per cent of life insurance was offered through insurance agents and 44.1 per cent through bancassurance.