Risks and Vulnerabilities
17. The continued growth and stability of the insurance sector is dependent on continued
economic growth and stability of the region, and the broader financial sector. While economic
growth is expected to continue in the range of 2–3 percent per annum, economic or political shocks
could have significant impacts on these expectations. The authorities are aware of these issues and
are working to maintain a stable environment.
18. Thailand's life insurance industry faces a number of challenges. Thailand's aging
population impacts on the sale of traditional products. There are strategic, operational and conduct
of business risks that must be managed in the development of new products. Seniors accounted for
about 14.2 percent of the national population in 2015 and are expected to grow to more than
25 percent by 2023. Another continuing challenge for Thailand's life industry is the ability of insurers
to match long-duration insurance liabilities with investment instruments in local markets.
19. The low interest rate environment also presents challenges for life insurance. Thailand,
like many jurisdictions, has seen interest rates decline to levels below what was assumed when many
long-term guaranteed policies were issued. Bancassurance has been a major driver of premium
growth in the past decade, and most of the life insurance products sold through that channel have
been guaranteed endowment products, which remain popular in Thailand. Life insurers could not
perfectly match the duration of their assets and liabilities, which causes volatility in earnings, capital
requirements and capital resources. Thai life insurers, especially those with guaranteed products in
their portfolio, aim to prospectively offer less guaranteed benefits and focus instead on life
protection, health protection and unit-linked products to shift investment risks to policyholders.
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