German insurer Allianz has urged more consolidation in order to develop and support innovation in the Thai insurance industry, especially for property and casualty insurance.
"Unlike the life insurance industry, which is developing nicely, the property and casualty industry is still at an early stage of development and more consolidation is needed to help it develop and bring more innovation to the industry," said Allianz chief executive Oliver Baete.
"If you want to have innovation you need to invest in technology and brands and for that to happen, the market needs to be profitable, otherwise people will not put money in," he said.
The property and casualty insurance market in Thailand is very small and fragmented while current regulations allow foreign company to partner with only one local operator.
"I think that the [insurance] industry needs to consolidate, particularly in the property and casualty market as there are too many players," Mr Baete said.
He confirmed the company's attempts over the past few years to acquire more stakes in local insurance companies in Thailand.
"For life insurance, we are already well set up in Thailand, but for property and casualty, given the legal situation, it's still hard to grow in terms of size," Mr Baete said.
In Thailand, the company operates life insurance through its subsidiary Allianz Ayudhya Assurance Plc, and property and casualty insurance through Allianz General Insurance.
"When we look at Thailand we also consider neighbouring countries since we know that the government is very keen to form a regional partnership for development," Mr Baete said.
He said the company expanded business in the region using its regional franchise model, which implies adoption of the same standards in terms of products and processes across the Asia-Pacific region.
Under the model, innovations created in each country could be adapted and used in other markets where the company is also present.
"We believe that the development in Thailand will be no different from that in other developed markets, and we can leverage our know-how to offer Thailand the best products that worked in other markets," Mr Baete said.
Like other countries in the region, Thailand faces challenges regarding the product structure of the insurance business.
Mr Baete said insurance companies have been offering products emphasising on saving and endowments with guaranteed returns over a long period of time, which is not sustainable, as interest rates fall, making it harder for companies to fulfil promises.
"We believe that the transition from these traditional endowment products to health and protection products will happen," he said. "As countries develop and families started to build their wealth, they will need to make sure that their wealth is well-protected."
Mr Baete said that as society such as Thailand ages, people will need more support for healthcare and retirement, which will help drive the growth of health products in the country.
Regarding innovation and digitisation, he said the Thai regulator, the Office of the Insurance Commission, is open to new ideas and technologies for use in the industry.
Mr Baete said that in the first stage, innovation will help make insurance products simpler and easier to access, while lowering distribution and administration costs.
"However, little innovation has happened around the product itself, as it is the next phase, which will surely come," he said. "The disruptions in the financial industry are important, and we are investing in a number of tech startups."