Thailand’s life insurance industry, which has witnessed decelerating growth rates since 2015, will decline in 2020 owing to the prevailing challenges aggravated by the macroeconomic impact of COVID-19, according to GlobalData, a leading data and analytics company.

GlobalData estimates that insurance premiums will decline for the second consecutive year by 1.6% in 2020. The industry is expected to recover from 2021 and is forecast to grow at a compound annual growth rate (CAGR) of 2.1% over the period 2019-2024 to reach THB662.70bn (US$21.91bn) in 2024.

Madhuri Pingali, Insurance Analyst at GlobalData, comments: “Life insurers in Thailand have been under pressure due to systemic challenges such as low awareness, aging population, declining GDP growth rate and prolonged low-interest environment. Downward revision in insurance prices due to the introduction of new mortality rates and the new regulatory framework, especially the implementation of IFRS 17 and 9, are set to further exacerbate the problems.”

Insurers are adapting to these challenges by prioritizing sustainable growth and revamping their product mix. Many companies are decreasing the share of policies with guaranteed return in favor of investment products where the insured assumes the investment risk.

Another area of focus includes the digitization of distribution, which offers relative cost advantage compared to the traditional distribution channels. Insurers currently rely on agency and bancassurance channels for more than 80% of the life insurance business.

Pingali concludes: “The projected GDP contraction in 2020 due to COVID-19 outbreak is expected to reduce personal savings leading to a decline in the life insurance business in 2020. The spike in the sale of COVID-19 insurance products in the last couple of months indicates that despite the immediate setback, the industry stands to benefit in the long-term due to increase in consumer awareness following the outbreak.”