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24 Apr 2023

Econ Digest

Non-life business continues to grow in 2023, but the impacts of COVID-19 insurance is not over yet


       KResearch expects that gross written premiums of the general insurance business will grow steadily by 4-5% in 2023. Growth in written premiums for the non-life insurance business this year will chiefly be driven by car insurance. KResearch expects that direct premiums for car insurance will grow 6.8-7.5%YoY in line with the positive effects from new car sales, tourism and transportation. Additionally, the direct premiums for car insurance will be supported by higher premium rates, as competition is expected to decline, and rising insurance costs based on reinsurance rates, including for electric vehicle (EV) insurance, which has an average premium rate that is approximately 20% higher than those for conventional cars in the same category, partly reflecting the fact that EVs are relatively new in Thailand. However, the premium rates and specific conditions of electric vehicle insurance may not be clarified until the end of 2023. With increased sales of EVs and more insurance service providers, EV premium rates will likely be more appropriate to support the EV market.

       However, there are negative factors that have affected business this year, including the impact of underwriting marine and transportation insurance due to the slowdown in exports caused by global economic conditions and a high base factor. Additionally, insurance companies have to be more cautious in underwriting health insurance because, under the new standard contract for health insurance, it is not allowed to cancel a customer’s policy renewal amid mounting risks of age, illness and public health costs.

       Regarding the impact of COVID-19 insurance from 2020 to 2022, as total claims amounted to THB150 billion, four non-life insurance companies had to close down while one is under a rehabilitation process. Additionally, the General Insurance Fund still owed more than THB54.5 billion under the insurance contracts to its creditors as of end of 2022, in order to settle claims against the insured persons on behalf of the insurance companies that have declared insolvent or closed down. Moreover, it may take a while for the General Insurance Fund to recover. The losses incurred have become a lesson for new risk insurance that requires caution and a concise framework.

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Econ Digest