Bangkok--16 Dec--Fitch Ratings
Fitch Ratings says Thailand’s life insurance industry outlook is stable, reflecting strong premium growth and prudent solvency position, with the impact of flooding expected to be short-term. This was the key message at Fitch Ratings (Thailand)’s Thailand Insurance Conference 2011 in Bangkok.
Mr Amnart Wongpinitwarodom, Assistant Secretary-General - Insurance Monitoring Developments and Analysis, Office of Insurance Commission, was the conference’s guest of honor and provided the opening keynote address.
Jeffrey Liew, Fitch’s Senior Director & Head of Insurance, Asia Pacific commented on the agency’s 2012 Asian Insurance Market Outlook, in particular, for China, Malaysia, Indonesia and Japan. The outlook for both the life insurance and non-life insurance sectors of these countries is stable, reflecting the steady market growth expected, modest to sound operating profitability, benign domestic economic conditions and modest capitalisation to support new business growth. However, there are also unique challenges to be faced - ranging from potential risks associated with commercial motor pricing reform, increased frequency of nature catastrophes and more stringent regulations.
“Various measures initiated by China Insurance Regulatory Commission resulted in a significant turnaround in the underwriting results of the country’s non-life insurance market in 2010. In Malaysia, the implementation of risk-based capitalisation, and the uplift of the foreign ownership limit continue to accelerate M&A activities in the market. Indonesia’s insurance market looks to be a strong growth engine into 2012 given its still low insurance penetration rate and benign economic growth,” said Mr. Liew.
Narumol Charnchanavivat, Director of Thai Banks/Insurance said the impact of life insurance claims from Thailand’s severe floods has generally been limited, although it has been more severe for general insurers. This is mainly reflected in a moderately lower-than-expected premium growth for 2011, due to the business disruption in Q411, which is usually a high season for the Thai life industry. In the medium-to long-term, bancassurance, product innovation and tax incentives are expected to support industry growth. “Downside risks would be the potential global economic slowdown and volatility in capital markets that could impact life insurers’ financial performance, although we expect the impact to be manageable given the moderate equity holding, which in general, is about 10% or less of assets,” added Ms. Narumol.
The conference was attended by over 100 senior executives and officials across the government, insurers and financial sectors, as well as members of the media.