Thailand's life insurance sector is expected to expand steadily this year, supported by rising health awareness and growing demand for critical illness coverage, while non-life insurers may see margins tighten amid rising claims from natural disasters, says credit rating agency Tris.
Tris Rating projects continued growth in life insurance premiums this year, underpinned by increased interest in health protection and retirement plans, while healthcare costs climb.
Investment-linked products, particularly unit-linked policies, are gaining traction, especially among younger consumers who seek integrated benefits across protection and investment.
Meanwhile, the non-life segment is likely to face a rising loss ratio due to elevated risks from earthquakes and other natural hazards, according to Tris. Recent seismic activity has heightened public awareness, spurring interest in fire insurance and industry all risk policies. These policies are also expected to benefit from real estate stimulus measures.
Motor insurance is projected to remain stable in 2025, with subdued economic growth and high household debt weighing on consumer spending. However, Tris notes voluntary motor insurance could experience rising claims due to high electric vehicle (EV) battery replacement costs.
The segment could see indirect support from government initiatives promoting EV adoption and auto loan guarantees by the Thai Credit Guarantee Corporation, especially for pickups, according to Tris.
Pet insurance, though still a niche market, is gaining momentum in Thailand, as consumer preferences diversify.
"While healthcare-related claims in non-life insurance are expected to decline due to the introduction of co-payment requirements, overall pressure from natural disasters could drag on the segment's profitability," Tris said in a report.
The performance of non-life insurers will largely depend on how well they manage claims, design specialised products, and control costs amid intensifying competition, noted the agency.
The insurance penetration rate in Thailand remains low. According to data from the Office of the Insurance Commission, insurance premiums represented just 5.0% of GDP at the end of 2024, with life insurance accounting for 3.5% and non-life 1.5%.
Life insurance premiums are forecast to grow 2-3% this year, with the key drivers an ageing demographic, greater awareness of financial planning, and rising healthcare costs. Tris expects bundled products offering life, health and investment features to play a critical role in attracting new policyholders.
"Life insurers remain well-positioned to sustain profitability despite macroeconomic challenges," the report said, with success depending on product innovation, digital transformation, cost control, and data-driven risk management.
Mobile health applications and digital sales of endowment and investment-linked policies are expected to provide new, long-term revenue streams. Although market volatility may elevate investment risks, the conservative investment profiles of Thai life insurers should keep such risks manageable, noted the report.
"The sector's profitability amid low-growth conditions and fierce price competition will depend on specialised offerings, strong cost discipline, effective use of data, and online distribution," said Tris.