TQM continues with aggressive growth strategy

TQM continues with aggressive growth strategy

The broker has exceeded its own expectations, writes Darana Chudasri

Mr Unchalin acquired an interest in his business later in life.
Mr Unchalin acquired an interest in his business later in life.

TQM Corporation takes pride in always being prepared, which has paid off during the pandemic.

TQM is the only SET-listed holding company that has insurance brokerage services as its business core. Its market capitalisation is more than 35 billion baht, exceeding other insurance companies. Its growth has accelerated as demand increases for Covid-19 insurance and innovative products that earned the company 460 million baht in insurance premiums in the first half of 2020.

The company listed on the Stock Exchange of Thailand (SET) at the end of December 2018, with the IPO listing at 23 baht for 300 million shares. Its market capitalisation that day was 6.9 billion baht.

The company's share price has since risen almost six times to more than 120 baht.

"We have walked further than we thought and we will keep going forward," said Unchalin Punnipa, TQM's chairman and president.

SMALL BROKER

The company was founded in 1953 by Mr Unchalin's grandfather, a Chinese immigrant. He was a local broker providing fire insurance in Yaowarat to Chinese businessmen who wanted to mitigate risk and ease losses incurred by frequent fires.

Mr Unchalin grew up as the company developed and he was chosen as the heir to the business as he was the only son. At first, he was not impressed because of the negative reputation attached to the insurance business at the time.

His stance on the business changed after his father died. He brought claims money to an old Chinese man who had known him since he was a child.

That "uncle" told him insurance had protected him from going bankrupt. He learned insurance helps people in times of crisis and is a worthwhile business.

The uncle's remarks changed his attitude towards the business. Mr Unchalin has since then dedicated his time to operating the company in new and different ways.

When he inherited TQM from his father, the company had only around 5-10 employees with total premiums valued at 5 million baht. Today, TQM has over 4,000 employees nationwide with total insurance premiums worth 12 billion baht.

Mr Unchalin said the three key drivers of the company's growth were technology and innovation, trust and flexibility and having the dynamics to change.

He said TQM is the first broker that adopted telesales, a novel sales channel that nobody believed would work in Thailand at the time because nobody would trust people they had never known or met.

Trust is necessary for the insurance business, he said, because insurance products and services are intangible. They are selling protection for possible incidents in the future, which nobody can be sure will happen or not.

"We started by selling to people who already knew us well -- that worked."

He said the company got the idea from visits to insurance partners in many countries with advanced insurance markets such as Korea, Japan, England and Australia. Seeing business operations in those countries sparked the idea of playing an aggressive role in sales.

The company invested over 200-300 million baht in technology development to expand its online sales channels for more than three years before becoming a SET-listed firm to prepare for rapid growth in online insurance purchases.

During quarantine, TQM's Line channel became popular as it helped insurers distribute microinsurance to a mass market of customers starting at just 200 baht, considerably cheaper than regular rates as a result of cutting out the human input from the process.

BROADENING HORIZONS

Today TQM is a top three broker in Thailand in almost all categories, among over 700 insurance brokers, including niche brokers. The first top 10 companies in the country have a combined market share of about 30-40% of total insurance premiums.

The company has three core business subsidiaries: TQM Insurance Broker, TJN Insurance Broker for non-life insurance and TQM Life Insurance Brokers for life insurance.

The board recently concluded a deal to expand to Cambodia and Laos through BIC Insurance via a joint venture between TO 2020 (TQM's subsidiary with 99.99% ownership) and Asia Investment and Financial Service. The company will hold 49% ownership (via TO 2020) in BIC Insurance when the deal is completed.

The insurance industry in Cambodia and Laos is in its early stages, with few competitors. These two countries also need investment in infrastructure and mega-projects that increase demand for insurance, Mr Unchalin said.

Some Thai insurers have entered the market but there are not any Thai brokers operating there.

"A benefit of being first is market awareness. The expansion is one of the jigsaw pieces to complete our mission to become Southeast Asia's top digital insurance broker."

The company aims to push its total non-life premiums to 50 billion baht within 2026 and keep growth at 15% each year, said Mr Unchalin.

TQM expects 35 billion baht or 75% of the growth target to come from organic growth, while 15 billion is expected from mergers and acquisitions (M&As) along with market expansion to Cambodia, Laos, Myanmar and Vietnam (CLMV).

The company plans to acquire brokers with expertise in different selling channels to fill segment gaps, such as TJM Brokers, a broker with experience in the vehicle segment acquired by TQM earlier this year. The firm will also share its expertise, operations, IT system and professional legal consultants with brokers. The collaboration will benefit them in terms of lower costs and expenses, too.

"Only 2-3 high-quality M&A deals are sufficient to push us to this milestone," he said.

INDUSTRY CHANGING

Mr Unchalin said the Thai insurance industry is gradually changing.

Sixty years ago, fire insurance occupied a key portion of the market. Thirty years later, car insurance became a front-runner, contributing to about 55-60% of total non-life insurance.

These changes are consistent with economic development as well as Thais' improving quality of life, he said.

"The industry is going to change again, accelerated by the pandemic, demographic changes, behavioural changes and technology advancement."

He said the contribution of health insurance, property insurances, and cyber-insurance will continue to grow in the future. Regardless of how the Thai insurance industry changes, and no matter how much liquidity the firm has on hand, TQM will continue to commit itself to the brokerage business model rather than taking the risk of being an insurer, Mr Unchalin said.

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