Insuring the masses

With micropolicies soon to be sold in convenience stores, low-income earners will have easier coverage options

Competition often brings out the best in players while benefiting consumers.

Heated competition among banking, insurance and utility firms in recent years has proved a boon to customers, who now enjoy a broad range of financial products aimed at serving them best in terms of convenience, suitability and cost.

Local consumers are witnessing a flurry of financial services. Life insurance was once considered a product for middle- and high-income consumers with big savings, but this is no longer the case. Insurance firms have begun to pursue low-income consumers, offering lower fees and contributions and easier access.

The latest initiative has seen insurance firms selling microinsurance policies at convenience stores. Apart from our Chinese steamed dumpling and bun, we can now by insurance at 7-Eleven or at any outlet offering Counter Service.

Both life and non-life microinsurance policies from the five leading providers will be available at all 8,500 points of Counter Service, 6,800 of which are in 7-Eleven stores.

The five insurers are Muang Thai Life Assurance, Bangkok Insurance, Muang Thai Insurance, Alliance Ayudhya Assurance and Thaivivat Insurance.

Microinsurance is aimed at low-income earners, giving rural people better access to insurance coverage. Residents in the provinces normally have no risk protection due in large part to the high prices and complexity of financial products.

Areepong: Products will reduce inequality

As a result, the Office of the Insurance Commission (OIC) initiated microinsurance to cater to consumers who can afford annual premiums of up to 1,000 baht. Another key feature of the products is ease of understanding.

Muang Thai Life Assurance will launch the first life insurance policies next Monday, with premiums of 1,000 baht a year for a five-year period and maximum protection of 278,000 baht.

It plans to offer two travel policies next month for people wishing to guard against risk during Songkran _ short-term protection for 1-5 days for 120 baht and protection for 6-10 days for 200 baht. Both types of policies have an equal assured amount of 200,000 baht. The company will also offer 10,000 baht for medical expenses.

Alliance Ayudhya's residential fire insurance will be available at Counter Service with a 500-baht annual premium covering fire, lightning and bombs. It will provide an insured sum of 200,000 to 500,000 baht, depending on property type.

Thaivivat Insurance will offer cancer protection for an annual premium of 711 baht, paying 50,000 baht when the client discovers the illness. In addition, it will pay for medical care of 20,000 baht a month for 10 months, up to a total of 70,000 baht.

Bangkok Insurance's personal accident policies will also be on sale at a 490-baht annual premium for a total insured sum of 100,000 baht. The policy will offer an additional 50,000 baht of extra expense. Clients will be entitled to a higher sum insured of 25% a year or a combined 200,000 baht during the protection period if stretched to four years.

Each insurer's policies will be available at Counter Service at a different point in time. A client wanting to buy microinsurance should study the details of each policy to see if they suit his or her requirements.

To buy a policy, clients are required to insert their ID card into a card reader and enter their mobile number. After getting the payment slip, they receive a confirmation text message from the insurer. The policy will be sent to their home address soon afterward.

Counter Service, the payment service provider of the Charoen Pokphand Group's CP All Plc, has developed both human resource and information technology systems in preparation for microinsurance sales. It is the first to receive a licence from the OIC to sell microinsurance products.

Weeradej Ackapolpanich, assistant vice-president of Counter Service, said the cost of microinsurance products will include all service fees. At least one staffer at each 7-Eleven will be trained to provide information and advice about the products.

"We expect low-income earners to buy more insurance policies under the microinsurance option," said Mr Weeradej. "Normally, 7 million customers go to 7-Eleven each day. Half the country's population uses 7-Eleven's services. Clients visit the convenience store twice a week on average."

Areepong Bhoocha-oom, the finance permanent secretary, said microfinance can help to reduce social inequality, offering an opportunity for low-income people to access risk protection for life and property, as medical care is a problem for low-income people when they fall ill.

About the author

Writer: Somruedi Banchongduang
Position: Business Reporter