Thailand’s Growing Insurance Market

Thailand’s Insurance market is small but one of the fastest growing in the Asia Pacific region next only to China & India. The country is relatively underdeveloped both in terms of insurance penetration and insurance density as compared to some of the developing countries with in APAC region. Both insurance density (Thailand USD 199, world average USD 267 in 2010) and insurance penetration (Thailand 4.3 percent, world average is 11 percent) is considerably low. Life insurance premium constitutes about 2.6 percent of GDP and non-life insurance premium about 1.7 percent of GDP. In Asia, Taiwan’s insurance market’s contribution is the highest accounting for about 18 percent of GDP, followed by Hong Kong, Korea and Japan contributing 12 percent, 11 percent and 10 percent respectively in 2010. Growing number of young population, new pension policy and inadequate health insurance are some of the growth drives in Thailand’s insurance landscape. Life and non-life insurance in Thailand are mainly sourced by insurance agents. However, other channels, such as bancassurance, are quickly catching up. The number of insurance players in Thailand doubled from 12 in 1995 to 24 in 2009. As the insurance market is introduced to new players in terms of foreign ownership, capital requirements, and solvency ratios, it is likely to see mergers and acquisitions in the years to come. Thailand’s life insurance market is highly concentrated, with the top five life insurance players holding nearly 70 percent of market share, and the remaining 19 players fighting for the remaining 30 percent. Thailand’s property/casualty insurance business (US$2.8 billion) is nearly 4 times smaller than the life business ($9.5 billion), which experienced negative growth in 2009 due to the financial crisis. Property/ casualty insurance in Thailand is highly fragmented, with 71 non-life insurance players operating in the space. The top five players held nearly 40 percent market share, with over 40 additional players possessing less than 1 percent market share. IT investment by Thai insurance companies in 2009 was estimated to be US$413 million. Due to the impact of the financial crisis, IT spending in 2010 was limited to maintenance of existing systems. Celent expects IT investment in the market to reach US$1.5 billion by the end of 2013.

Welcome to Celent’s Asia Blog

Celent is continually looking for ways to better connect and interact with the financial and technology communities. Continuing in the tradition of Celent’s industry-specific banking and insurance blogs, we are now launching a blog focused on issues in business and technology strategy in the Asian financial services. Welcome to Celent’s new Asia blog. From the beginning, a differentiator at Celent has been our coverage of financial and technology issues from a global perspective. As part of this commitment, over the past few years, we have been ramping up our research on Asia and India. We have now built up quite a substantial library of research on these regions, which we think is pretty unique. Building on this, we have recently also launched two new research services, one focused on India, the other focused on the rest of Asia. These services essentially bundle reports from our banking, securities & investments, and insurance services into regionally-focused services aimed at firms seeking cross-vertical competitive information on Asia and India specifically. And now the Asia blog. We have a baker’s dozen of analysts ready to lob commentary on what we see developing in the region, as well as on Celent’s activities. We think you will find our essays informative and stimulating. And we encourage you our readers to participate in the feedback loop by sending us your comments and questions. The goal is to create an active dialogue on the evolving financial services and technology markets in India and Asia.