It is a generally accepted fact that, at some point or another in life, most people will either wish they had insurance, or will be thankful that they do have it. In Thailand it is no different, and although only 29 percent of the population currently own insurance, the growth prospects for the local industry are very positive. The insurance provision market has become increasingly competitive over the years as more customers look for better deals. Viriyah Insurance is one of the key players in this market and has been bringing innovation to the sector for over 66 years.
According to Pravit Suksantisuwan, Deputy Managing Director at Viriyah, the key to the company’s years of success is that it adheres to strong corporate values. “The company’s mission helps define our direction and strategies since it is the crucial basis of the company’s sustainable growth,” he said in an exclusive interview. “Our company has been in this business for over six decades, and our understanding of Thailand’s market is applied to develop the our mission statement.”
Non-life penetration [in Thailand] has clearly shifted upwards, having been kept down by the competitive pressures of a fragmented segment for years
Since it’s inception, Viriyah has been committed to promoting its business by providing warm services through an extensive nationwide network of branches, which boast modern and efficient processes. However, it has not always been plain sailing for Viriyah. The insurance market in Thailand is not very well developed. According to research by the Thai Life Assurance Association, in 2011 only between 28 and 29 percent of the population owned life insurance. However, recent natural disasters like the floods that struck and paralysed the country in 2011 have raised awareness of just how vital having insurance can be, both for private customers and businesses. As a result, 2012 was a record year for growth in the industry. According to the Thai Embassy in Washington, “Total premium growth was 19.4 percent for the first half of the year (2012); a value of $8.5bn. Non-life insurance premiums rose by 22.9 percent, or $2.7bn. Life insurance, meanwhile, increased by 17.8 percent for a $5.8bn rise over the same period in 2011.”
Small, but growing
“Thailand’s insurance market is small, but is one of the fastest-growing in the Asia-Pacific region behind China and India,” explains Suksantisuwan. “The non-life insurance market is also highly concentrated, with the top five players holding nearly 50 percent of market share. The Thai insurance penetration rate is still quite small when compared to the average penetration rate of the ASEAN (Association of Southeast Asian Nations) region, but the private sector and government are cooperating to build awareness on the importance of the insurance system to the Thai population. Insurance should be an integral part of everyone’s livelihood and we really need better insurance access for the people. Insurance can contribute materially to Thailand’s economic growth and social stability and can help alleviate the financial constraints of the government social services sector.”
The floods of 2011 have had a profound impact on the non-life insurance segment in Thailand. Substantial hikes in reinsurance costs have been passed on to customers by way of significant across-the-board price rises and increased rates in all lines. Thailand’s insurance industry, however, has seen a huge boost in non-life insurance policies as people seek to insure their homes and businesses. “The non-life segment as a whole has been boosted by Thailand’s economic recovery in the wake of the floods,” says Suksantisuwan.
“Non-life penetration has clearly shifted upwards, having been kept down by the competitive pressures of a fragmented segment for years. We were fully supported by the government in setting up the National Catastrophe Insurance Fund to provide risk management through insurance and reinsurance. It also provides assistance to non-life insurance businesses by increasing the capacity to extend coverage at appropriate premiums. This newly enhanced catastrophe insurance scheme would not only restore confidence among investors and entrepreneurs but also be in reach of the wider population.”
The Thai government has been extremely active in encouraging the development of the local insurance industry since the floods, as a way to ensure the population is somewhat better prepared in the event of future natural disasters. “The Thai insurance regulator, the Office of Insurance Commission, has introduced the Insurance Development Plan Volume 2 to build up financial confidence, strengthen the capacity of the insurance system, improve the standard of services and protection for policyholders’ interests and to promote the infrastructure of insurance,” explains Suksantisuwan. “And at present, the World Bank is promoting Thailand as the insurance centre of the ASEAN to the more advanced economies.” These measures have been vital in supporting sustained growth in local industry.
With sustained growth in mind, Viriyah has been dedicating all of its available resources to extending its reach in Thailand, namely by expanding its services. “We are concentrating on expanding our network throughout all parts of Thailand,” says Suksantisuwan. “Our complete services include underwriting branches, claim service centres, agent/broker offices and company-certified repairing facilities.” According to Suksantisuwan, developing and improving the company’s network is vital for customers to be able to “acquire equitable and high quality service conveniently. In order to reach our goal and maximise customer satisfaction, 131 company branches have been established, which cover 85 percent of the country, and 448 company-certified repairing facilities countrywide have also been approved. We are aiming to expand our company’s branch network to cover an entire area of the country in future. Our complete service network is definitely one of the major factors that has ensured Viriyah has been the first company in customers’ minds over many decades.”
Because of the success the company has been experiencing domestically – Viriyah has been the top vehicle insurer in Thailand since 1992, and currently holds over 25 percent of the market share – the company is looking to expand into other ASEAN countries.
Motor insurance has been Viriyah’s core business for much of the past two decades.
“Revenue from car insurance accounts for more than 92 percent of our total premiums in Thailand,” says Suksantisuwan. “Car insurance premiums in 2012 generated THB25.54bn and THB20.53bn for the first eight months of 2013. And now the upcoming launch of the ASEAN Economic Community single-market zone will help boost our growth both domestically and internationally. The company will enjoy more benefits from cross-border transport, as cars or trucks from other ASEAN countries passing through Thailand will need insurance, especially cargo insurance and carrier liability,” he says. “We are also considering setting up more branches outside Thailand and have been looking for potential partners in preparation for the bigger demand once the single market is implemented. So far, the company has already expanded into Laos, Cambodia and Malaysia, while in Myanmar our business is managed by representatives.”
Last year, non-life insurance premiums totalled THB179.43bn, an increase of 27.96 percent year-on-year. Motor insurance garnered the most premiums with THB179.43bn, up 27.96 percent year-on-year. That was followed the miscellaneous insurance with THB60.61bn and fire insurance with THB9.76bn, up 36.83 percent and 21.04 percent year-on-year respectively. Motor insurance is one of the biggest market segments in the Thai insurance market, so Viriyah is ideally poised to continue growing its business domestically. “We are very satisfied with the year’s financial results in all aspects in terms of direct premium written, underwriting profit, investment profit, combined ratio and liquidity ratio,” says Suksantisuwan. “We are expecting to raise over THB33bn in direct premiums for this year. To further improve our performance we will develop a cost reduction strategy that maximises efficiency by using a combination of new technology and process improvement such as mobile service technology.”
Viriyah has certainly been laying the groundwork to continue developing its businesses. The Thai Office of Insurance Commission has predicted that the total growth rate of non-life insurance industry this year will be approximately 18 percent, making it an ideal time for Viriyah to increase its market share.
“Our company’s growth rate has reached 28.63 percent in 2012 according to the government’s first-car-buyer tax refund policy,” says Suksantisuwan. “However, the policy is already finished for this year. Therefore, we estimate that our growth might be 20 roughly percent.” With these prospects, it seems likely that Viriyah can only go from strength to strength.