Analysts at AM Best expect the non-life re/insurance industry in Thailand to face growing pressures on profitability due to fierce market competition and the need for improved pricing and operational sophistication.
The Thailand non-life segment posted THB 232 billion (US $7.5 billion) in direct premium written (DPW) in 2018, making it the second-largest non-life market in Southeast Asia.
Currently, AM Best considers the market’s earnings to be adequate, with motor, health and personal accident (PA), and property lines business expected to be key growth drivers going forwards.
However, various segments of the market are facing difficulties in maintaining underwriting margins, with the market’s combined ratio moving from 92% to 97% between 2015 and 2018.
Motor insurance continues to be the largest line of business in Thailand, with data from the Office of Insurance Commission (OIC) recording 5.4% growth in premiums over the first nine months of 2019.
That said, statistics also show a deterioration in motor insurance underwriting results, which declined to an estimated loss of THB 1.6 billion in 2018 from a technical profit of THB 2.6 billion in 2013.
Although the health and PA business in Thailand’s non-life segment remains profitable, the segment’s profit margins also have come under increasing pressure.
For example, in 2018 the market posted an underwriting profit of THB 1.4 billion, compared with THB 1.9 billion in 2013, while the combined ratio increased moderately during this timeframe, to 95%, from 90%, due mainly to a higher loss ratio.
Looking at property lines of business, AM Best expects growth in this segment to increase given the likelihood of increased government spending on transportation and energy projects, along with foreign investment in the economic development of Thailand’s eastern seaboard.
Overall, despite some concerns about underwriting results, AM Best views the market’s balance sheet as strong.
