Insurers buoyant on Thailand [Bangkok Post, Thailand]

May 31--SINGAPORE -- Thailand's insurance industry is performing well despite political instability and a weak economic environment, industry executives say.

Paul Sinnott, head of the business development in risk and financial practice at Towers Watson (Hong Kong), said insurance companies would do better by showing their commitment to the country rather than using the recent upsurge in political violence to justify classifying Thailand as a high-risk jurisdiction.

"Inevitably, in troubled times, people may well see more need for insurance," he said.

The recent unrest has increased the perceived risks of operating in Thailand, but firms were not expected to pull out of the market, he said.

Politics would only have a limited impact on new investment in the insurance industry. But Mr Sinnott said the Thai market remained closed due to the absence of new licences, making it hard for new companies to enter.

Thailand caps the foreign ownership of insurance businesses at 49% with no new licences currently available. However, local holding company structures are commonly used to circumvent the regulations.

Countries such as Taiwan and Hong Kong allow 100% foreign ownership with new licences available.

Keith Perkins, AXA Asia Life's regional chief operating officer, said the company had seen no impact from political problems on its business or the local insurance industry.

Sinnott: High demand in troubled times

"Now our priority is the safety of our staff," Mr Perkins said. "Bangkok is affected in disruption, but I don't believe the overall confidence in the industry has changed."

Sara Gori, AXA Group's external communications director, said the company was not pessimistic about Thailand. New investment was not an issue as insurance firms usually invest in Thailand through joint ventures.

Mr Sinnott said there had been good progress in the Asian life insurance market over the past 10 to 15 years with the development of more products and distribution channels.

Asia has seen average annual growth in income from life insurance premiums of 15% to 25%. China alone recorded 40% growth last year.

Meanwhile, western markets like the US and the UK have been stagnant. Japan is experiencing a decline in premiums for the first time in decades.

Mr Perkins said the long-term prospects for life insurance premium growth in Asia remained favourable with projected annual growth of 13% over the next decade.

Premiums across Southeast Asia are expected to grow by 9% to 13% a year, compared with 4-9% in developed markets such as Hong Kong, Singapore, South Korea and Taiwan. High-growth markets such as China and India could enjoy up to 15% to 19% growth respectively. Asia currently makes up 11% of the total income of France-based AXA Group.

Mr Perkins said the growth would be largely driven by Asia's ageing population, increasing affluence in the region and low life-insurance penetration.

Krungthai-AXA Life Insurance, which currently ranks sixth in the Thai market, recorded a 61% increase in total premium income to 4.16 billion baht in the first quarter this year. It also saw an 88% increase in its new business index (NBI) to A$56.6 million (1.683 billion baht).

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