Insurance premiums fell by 6% year-on-year during the first half, the first such occurrence in 15 years, as the economic slowdown and regulatory changes contributed to the decline, says the Thai Life Assurance Association (TLAA).
Total insurance premiums received were worth 296 billion baht between January and June. New premiums were valued at 84 million baht, down 8% year-on-year, and renewal premiums were worth 212 million baht, down 5% year-on-year.
"This was the first time the industry posted a fall [in total insurance premiums] in an environment where prolonged low interest rates made endowment insurance policies prone to higher risks," said TLAA president Nusara Banyatpiyaphod.
Apart from Thailand's economic slowdown, the insurance sector is facing several challenges in the regulatory environment, such as new regulations and market conduct affecting the bancassurance business model and pressure from new accounting standards, namely IFRS 9 and 17 and Risk-Based Capital II, Ms Nusara said.
Losses incurred from fraud also affect investment sentiment in insurance products, she said.
The insurance penetration rate increased by 3.9% during the first six months, according to the TLAA.
The association has revised its forecast for full-year premium growth to flat or a 3% decline. Many companies are expected to sell single premium products conservatively.
Renewal premiums are also expected to decline, while health and rider policies, insurance investment products and unit-linked policies are likely to become more popular, the TLAA said.
Sara Lamsam, vice-president for marketing at TLAA, said health and rider policies showed a positive growth trend in the first half, up 10% year-on-year.
"We expect that health insurance and critical illness riders will break the 100 billion baht threshold this year," Mr Sara said.
Insurance agents continued to be the main distribution channel during the first six months of the year, making up 48.7% of total sales, followed by bancassurance (43.4%), online sales (5.5%) and directing marketing (2.5%).