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4 Mar 2022

Econ Digest

Life insurance business 2022: Counting on recovery in line with economic conditions…adjusting to new Financial Reporting Standards


        The outlook for the life insurance business in 2021 turned slightly positive after two consecutive years of contraction, mainly due to a return to positive growth in the premium amount of new insurance policies, particularly single-premium life insurance, while annual renewal premiums did not grow. Although the life insurance business as a whole in 2022 will continue the period of adjustment since the previous year, as a large number of insurance policies are still in the period when they shall continue to provide coverage after the expiration of their premium payment, the growth of new policies purchased may exceed expectations, especially if Thailand’s economy grows by 3.5-4.5% as forecasted by the Office of National Economic and Social Development Council (NESDC)’s. However, it is necessary to monitor the trend of inflation levels and interest rate hikes as both factors may affect Thais’ purchasing power directly and indirectly. KResearch projects that insurance companies will attempt to maintain last year’s growth rate in 2022, which means total new policy premiums must grow by at least 7 percent during the year.

        However, the interim period before the implementation of new Thai Financial Reporting Standards (TFRS) on January 1, 2024 will challenge the life insurance business in terms of restructuring their main products to be widely accepted. The years 2022-2023 will be a key period for the development and promotion of new insurance products that offer more coverage. Meanwhile, saving-based insurance products will tend downward and be adjusted to participating policies or investment-linked insurance like Unit-Linked and Universal-Life insurance. Insurance companies will also develop the ability to utilize new technology to reach a larger number of customers and broaden their customer base in order to compensate for the reduction in premium per policy.

        Demand for health insurance still has room to continue to rise. Constrained by inadequate access to basic health care services, the purchase of health insurance tends to be a basic need to cope with serious illnesses that require hospitalization. In addition, the revised standardized health insurance contract will take effect from 2022, which is more beneficial to insurance buyers, making it easier to compare the cost-effectiveness of contracts of various insurance companies, and giving buyers the option to purchase health insurance that does not duplicate their existing policies. This not only helps insurance companies to expand their customer base, but also helps to better diversify insurance risks.

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Econ Digest