The Thai Life Assurance Association (TLAA) hopes that an improving economy will support the growth of the life-insurance industry, but it will closely monitor purchasing power after the prolonged economic slowdown and the high household debt.
Last year, total premium income of the life-insurance industry grew by 6.7 per cent, lower than the target of 7 per cent because of lower purchasing power. However, the TLAA hopes that the expected GDP growth of 3.7 per cent this year will help boost premium income by 9 per cent, said association president Sara Lamsam.
Based on the growth target of 9 per cent, total life-insurance premiums will reach Bt585.7 billion.
In past years, the industry enjoyed double-digit growth. Sara noted that purchasing power was an indicator of whether the industry would return to that level of growth, and the TLAA would closely monitor household debt and living costs, which can affect purchasing power. This year, premium income from first-year policies is targeted at Bt130 billion, representing growth of 9 per cent year on the year. Income from single-premium policies is targeted at Bt53 billion, representing growth of 3 per cent, and new-business premium income is projected at Bt183 billion, growth of 7 per cent. Renewal premiums are targeted at Bt402 billion, growth of 10 per cent.
The TLAA targets a persistency rate of 83 per cent.
Last year, total premium income grew by 6.7 per cent to Bt537.51 billion. Apart from the economic slowdown, several life-insurance companies also toned down promoting single-premium policies, which affected total income and the persistency rate, Sara said.
"We will re-evaluate the factors of economic slowdown and high household debt in the middle of this year as to whether they will influence life-insurance [sales] and whether this industry will have a chance to grow by double digits," he said.
The association believes that a stronger economy driven by government spending and stimulus packages will spur sales of life insurance. Moreover, amended regulations in line with the Asean Economic Community have encouraged Thai insurance firms to invest outside the country, especially in Cambodia, Laos, Myanmar and Vietnam. The next destinations for Thai life-insurance investment are Indonesia and the Philippines.
The ageing of society and the tax deductions from buying life insurance are still key factors for the long-term growth of the industry, Sara said.
Based on the growth target of 9 per cent, total life-insurance premiums will reach Bt585.7 billion.
In past years, the industry enjoyed double-digit growth. Sara noted that purchasing power was an indicator of whether the industry would return to that level of growth, and the TLAA would closely monitor household debt and living costs, which can affect purchasing power. This year, premium income from first-year policies is targeted at Bt130 billion, representing growth of 9 per cent year on the year. Income from single-premium policies is targeted at Bt53 billion, representing growth of 3 per cent, and new-business premium income is projected at Bt183 billion, growth of 7 per cent. Renewal premiums are targeted at Bt402 billion, growth of 10 per cent.
The TLAA targets a persistency rate of 83 per cent.
"We will re-evaluate the factors of economic slowdown and high household debt in the middle of this year as to whether they will influence life-insurance [sales] and whether this industry will have a chance to grow by double digits," he said.
The association believes that a stronger economy driven by government spending and stimulus packages will spur sales of life insurance. Moreover, amended regulations in line with the Asean Economic Community have encouraged Thai insurance firms to invest outside the country, especially in Cambodia, Laos, Myanmar and Vietnam. The next destinations for Thai life-insurance investment are Indonesia and the Philippines.
The ageing of society and the tax deductions from buying life insurance are still key factors for the long-term growth of the industry, Sara said.
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