While the introduction of the co-payment clause for health insurance in mid-March may dent sentiment, Allianz Ayudhya Assurance is confident of achieving strong double-digit premium growth this year, outpacing the expected market gain of 2-3%.
President and chief executive Thomas Wilson said the Thai life and health market has posted "anaemic growth" over the past five years, reflecting sluggish GDP gains over that period.
He said the low overall rate combines slower growth for life and retirement policies and the higher growth rate for health policies due to greater health awareness following the pandemic.
"We expect these macroeconomic conditions will continue in 2025, leading to overall market growth of 2-3%," Mr Wilson told the Bangkok Post.
In his view, the co-payment scheme, which takes effect on March 20, will pose short-term challenges to the insurance industry.
"In the near term, the small group of consumers for whom the clause is triggered may perceive increased out-of-pocket expenses negatively, leading to hesitation in purchasing or renewing health insurance policies. This could impact overall premium growth," said Mr Wilson.
However, he said co-payment, which has policyholders pay 30-50% of their medical expenses, also offers "overwhelming benefits" as it helps control medical cost inflation by "encouraging responsible healthcare consumption, reducing unnecessary medical expenses and ensuring the sustainability of private health insurance".
Mr Wilson said healthcare inflation in Thailand is expected to be 9-10%, though a recent estimate by Willis Towers Watson said it tallied 15%, well above the general inflation rate.
At this rate, he said healthcare costs will double roughly every eight years unless some measures are taken, potentially leading to an unsustainable and unaffordable healthcare system.
Mr Wilson said the co-payment clause is only triggered for instances of overuse of healthcare services, with full policy benefits for the overwhelming majority of policyholders.
"The importance of the new rule is not the co-payment per se, but rather in providing an incentive for insured individuals to proactively manage the effectiveness of their healthcare expenses," he said.
"This supports a sustainable healthcare system and helps to keep the price of private insurance affordable."
Insurers should focus on customer communication, educating policyholders on the long-term benefits of co-payment, such as improved premium stability and healthcare sustainability, said Mr Wilson.
Allianz Ayudhya Assurance projects strong double-digit growth in both overall and new premiums, driven by the company's outstanding agency force and its durable partners such as Bank of Ayudhya, he said.
"To achieve our growth target this year, Allianz Ayudhya will focus on several core activities, including fortifying our strong bank relationship and agency force," said Mr Wilson.
Another strategy is continuing to develop customer-centric products to meet the health, savings and retirement needs of all segments, from the mass market to affluent individuals, he said.
The company wants to deliver value to customers in a cost-effective and efficient manner, said Mr Wilson.