Thailand's insurance industry is projected to grow by 2-3% this year, driven by increasing public awareness of rising medical inflation, an ageing society and the extension of the health insurance coverage age to 80, says the Thai Life Assurance Association (TLAA).
Medical treatment costs in Thailand have averaged 8-10% per year, with some years reaching 15%, significantly higher than general consumer inflation.
The transition to an aged society further drives the growth of health and critical illness insurance, said TLAA president Nusara Banyatpiyaphod.
However, the growth rate for this year is expected to be lower than in 2024, when total premiums increased 3.23% to 654 billion baht.
New business premiums totalled 184 billion baht, up 3.28%, while renewal premiums gained 3.21% to 470 billion baht.
The policy retention rate was 83%.
First-year premiums totalled 120 billion baht, up 6.81%, while single-year premiums amounted to 64.3 billion baht, down 2.71%.
"Economic and social factors along with the growing health-conscious trend were drivers of life insurance business growth. This is particularly evident in rising demand for health and critical illness insurance," said Mrs Nusara, also chief executive of Ocean Life Insurance.
Health and critical illness insurance premiums soared 13.7% last year to 125 billion baht, representing 19.1% of total premiums. Life insurance premiums increased 8.93% to 111 billion baht, accounting for 16.9%, while endowment insurance edged up 0.76% to 282 billion baht, representing 43.2%.
In terms of distribution channels, agency sales grew 2.32% to 347 billion baht, a 53% share, followed by bancassurance at 246 billion, making up 37.5%, a gain of 2.67%.
Sales through brokers gained 11.9% to 34.5 billion baht, comprising a 5.27% share, while telemarketing dipped 5.49% to 12.9 billion, making up 1.97%.
As of the third quarter of 2024, data from the Office of the Insurance Commission showed the life insurance industry had a capital adequacy ratio (CAR) of 373 trillion baht, well above the supervisory CAR requirement.
Despite growth potential, Mrs Nusara said the life insurance industry must navigate challenges such as global economic uncertainty, slow domestic economic growth, inflation and interest rate trends, which impact savings and investment decisions.
Other factors include implementation of the new TFRS 17 financial reporting standard this year, and ongoing geopolitical tensions and trade conflicts that increase market volatility and economic risk, she said.
To mitigate these challenges, TLAA is focusing on sustainable business development by integrating environmental, social and governance principles into its operations.
This framework should support industry growth and ensure its long-term sustainability, said Mrs Nusara.