Since the turn of the millennium, the population of Thailand has been aging at a rapid rate. In fact, the Southeast Asian country’s National Economic and Social Board estimates that by 2040, the elderly, which accounted for only 5 percent of the population as recently as 1995, will be approximately one-third of Thailand’s total population.
According to Watchara Intharachat, a 13-year MDRT member from Bangkok, Thailand, the changing demographics can bring benefits to the insurance industry. Intharachat points out that life insurance premiums in Thailand increased by nearly 6 percent in 2017, with the expectation that they will continue to grow at an accelerated rate. He sees this growth as being a result of the aging population, and anticipates it will last for years to come.
“Many new products have recently come out to serve the needs of every target group, especially retirees,” he said. “Since Thailand is seeing a big increase in senior citizens, pensions and regular income life insurance packages are becoming more popular. Companies are beginning to improve their health insurance to become more diverse.”
Diversification and change continue to be the name of the game in this nation of 69 million. Srichan Pattananitsakul, a 15-year MDRT member from Bangkok, says new government regulations in Thailand have led to an increased number of products as well as greater literacy regarding those products among the populace.
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“Since customers desire simplicity and expedience, insurance companies must create products that are easily understood,” she said. “Agents and financial advisors need to adapt along with the new regulations to improve themselves, learn, comply, and be able to offer services that meet the customers’ demands and obligations.”
One such change has been the switch from pure insurance policies to unit-linked insurance plans (ULIP). A ULIP is structured similarly to a mutual fund, requiring an initial lump sum as well as annual, semi-annual or monthly premium payments, and is linked to the investment market.
ULIPs can be used for various benefit payouts such as life insurance, retirement and education. Pattananitsakul estimates that in the next five to 10 years, ULIPs will become even more prevalent in her country, causing a need for adjusted selling strategies.
“Unit-linked insurance products have grabbed so much attention from the consumers,” she said. “But there are some risks in investing. Consumers and financial advisors should have this knowledge and understanding.”
Intharachat agrees that ULIPs are the way of the future and that more Thai people are just beginning to understand this type of investment.
“This product is playing quite a big role in the business,” he said. “As a result, it enables the business to be able to take care of its customers in all aspects. My team and I must create a plan in which we can eventually sell all types of life insurances, especially unit-linked, which we must get a permit for.”
He also emphasized that his team must learn how to explain complicated products like ULIPs and to take the client’s needs and desires into account before closing a deal.
“There should be no misunderstanding while proceeding with the insurance policy,” he said. “More importantly, each offer needs to focus on how much the client can afford.”
Another regulatory change has been in the area of health insurance. The government now grants tax deductions to those who have health insurance — capped at 15,000 Thai baht — as well as for those who have both health and life insurance — capped at 100,000 Thai baht. The results of this initiative are obvious — and heartening to agents like Intharachat and Pattananitsakul.
“This encourages people to pay more attention to getting a life insurance and a health insurance plan,” Intharachat said. “It is good for the business, which pushes my team and me to develop our health insurance products to comply with clients’ needs.”
Additionally, in 2013, Thailand’s Office of Insurance Commission announced the creation of the Insurance Bureau System, a centralized database that provides greater governmental oversight to the industry and ultimately will allow customers to keep tabs on their own insurance products.
Clearly, such technology is increasingly playing a role in Thailand’s insurance industry. Pattananitsakul anticipates that the rise of insurance technology, assisted by the prevalence of smartphones, will lead to more on-demand services, customized advice and data analysis from customer intelligence systems.
“Adaptations must be made by life insurance companies to emphasize suitable products while not alienating the consumers who are digitally or industry illiterate,” she said. “Technology will transform the entire working system.”
Intharachat believes that, as the markets grow, technology will significantly impact distribution channels.
“In the future, selling and purchasing will be completed online or digitally, which will be much more convenient,” he said. “The distribution channels will continue to grow and change, so agents who participate in this business should be ready to adapt.”