ASEAN integration offers growth opportunities to insurers, says Viriyah
A standardised financial framework across the AEC will lead to the creation of new insurance companies and the expansion of existing ones, say Arthapas Cheuasangpan and Nittaya Dockchan from Thailand's The Viriyah Insurance
The integration of the ASEAN Economic Community is naturally going to shake up Asia’s financial service providers. What changes can we expect in the insurance sector as the countries come closer together? Actuarial Analyst Arthapas Cheuasangpan says that far from consolidation in the insurance industry, the opportunities will see new businesses emerge. He gives an overview of the competition in the ASEAN countries, with Thailand’s non-life premiums worth $8.4bn. Nittaya Dockchan, Deputy Managing Director of The Viriyah Insurance, explains how the company will be working with international partners to deliver cross-border services, and Viriyah’s plans to expand into Thailand’s health and personal accident insurance sectors.
World Finance: The integration of the ASEAN Economic Community is naturally going to shake up Asia’s financial service providers; joining me to discuss the insurance sector are Arthapas Cheuasangpan and Nittaya Dockchan from Thailand’s The Viriyah Insurance.
Arthapas, what changes can we expect in the insurance sector as the ASEAN nations come closer together?
Arthapas Cheuasangpan: The idea behind ASEAN is to create a strong, competitive economy, which benefits all 10 member states. There are many benefits: the free flow of goods and services. An international firm can set up offices throughout the ASEAN countries. Banks will find it easier to provide loans and capital to overseas companies. Lastly, the free movement of eight key professions, who will be able to move freely throughout the ASEAN countries.
Overall, the stronger economy will ensure that consumer demand for insurance products increases, and in turn it will also lead to the creation of new insurance companies and the expansion of existing insurance companies.
At the moment though, there are examples where countries use different systems, or have different legislation, which makes it difficult for consumers and companies to do business across the region. In order to liberalise the interest market, the AEC will aim to standardise the financial framework; and these changes fall under the AEC Blueprint 2025.
World Finance: How does Thailand’s non-life insurance sector compare with that of your neighbours’?
Arthapas Cheuasangpan: Competition is high in the ASEAN. Indonesia has 29 companies, compared to Thailand which has 63. While Myanmar has the least, with three companies.
Within the region, Singapore has the most non-life insurance premiums, of $11.5bn, followed by Thailand, which has $8.4bn. Thailand actually has the highest penetration ratio compared to the ASEAN region, at 2.2 percent. The ratio in Thailand is even higher than in China and Hong Kong.
At the other end of the scale, Brunei, Cambodia, Laos and Myanmar each have non-life insurance premiums under $1bn.
World Finance: Nittaya; Viriyah has established itself as the leading, most trusted name in motor insurance in Thailand; so how are you going to be working to establish that same brand overseas?
Nittaya Dockchan: Initially we will develop partnerships with local trade partners. And through these channels we will assist our partners on technical issues, and on how to improve our claim service efficiency.
Up to now, the company has cooperated with Allianz General Laos to offer cross-border insurance to customers crossing the border into Laos by motor vehicle. And this cooperative approach will be extended to other border countries such as Cambodia, Myanmar and Malaysia.
The company has extended the third-party liability to other Asian countries where we have a large number of cross-border cargo transporter customers. And according to our customer opinion survey, most of them found this service very useful, and it can enhance their business.
World Finance: Thailand’s health and personal accident insurance sectors have been growing at double-digit rates for recent years; how are you going to be expanding into these areas?
Nittaya Dockchan: We will apply the business model of motor insurance by emphasising our leadership in claims service.
The company has been able to use the knowledge and technology expertise, but most of all, the cooperation from our business partners, to develop a top quality claim service to respond to our customer needs with the highest efficiency. And with Thailand on the verge of becoming an ageing society, people are realising the fact that they need to prepare and look at appropriate insurance plans. And the company takes this opportunity by joining forces with high-profile major business partners that already have a comprehensive health service network in Thailand and other Asian countries. One of these business partners is the Bangkok Hospital Group. And we are now in the process of preparing the necessary things before launching this project in this fourth quarter.
Meanwhile we are also getting ready to provide top-up services without the health insurance scheme, under the public welfare systems, such as the social security system, the universal healthcare system.
World Finance: Nittaya, Arthapas: thank you both so much.
Arthapas Cheuasangpan, Nittaya Dockchan: Thank you.