The life insurance industry in Thailand is projected to grow from THB602.4bn (US$19.2bn) in 2020 to THB686.9bn (US$22.8bn) in 2025, in terms of gross written premium (GWP), according to GlobalData, a leading data and analytics company.
GlobalData has revised Thailand’s life insurance forecast in the aftermath of the COVID-19 pandemic. As per the latest data, Thailand’s life insurance market is forecasted to register a moderate compound annual growth rate (CAGR) of 2.7% during 2020-2025.
Ashutosh Sharma, Practice Head of Insurance at GlobalData, comments: “Thailand life insurance segment was driven by whole life insurance, which accounted for 72% of life insurance premiums in 2020. The economic slowdown due to the COVID-19 pandemic and increased volatility of stock prices leading to subdued investment yields reduced policyholders’ appetite to purchase unit-linked products and impacted the segment’s growth in 2020.”
According to the National Economic and Social Development Council, Thailand’s real gross domestic product (GDP) reduced by 6.1% in 2020, the largest decline in more than two decades. This was primarily due to the decline in tourism and exports. According to the Tourism Authority of Thailand, the number of foreign tourists declined by 83% to 6.7 million in 2020. Similarly, exports declined by 6.01% to US$231.47bn in 2020.
Besides the declining economy and low interest rate environment, the country’s aging population prompted life insurers to revamp their product mix and prioritize sustainable growth. This is expected to see change in product offering with more focus on standard insurance products instead of investment linked plans.
Insurers are also offering benefits to customers like discounts on premiums and extension on premium renewal dates to support renewals. Furthermore, increased awareness and COVID-19 assistance offered by life insurance policies supported growth of life segment in 2020.
Mr. Sharma concludes: “The life insurance business in Thailand is expected to face challenges in the short-term due to the periodic resurgence of the COVID-19 pandemic. With the country’s economy still under recovery, the growth in the life insurance segment is expected to be a protracted one.”