Thai car insurance policies get cheaper

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Thai car insurance policies get cheaper 
Bangkok Post: 29 Jun 2009
www.BangkokPost.com

Insurance policies gets cheaper

Cheaper motor insurance policies are in the pipeline as companies offer more affordable products to woo drivers as consumption shrinks.

The used-car segment is also being hotly contested as new-car sales slump.

In fact, new cars make up only 10% of the automobile insurance portfolio, with this year's sales forecast at only 400,000, a fall from 600,000 units last year, said Kritvit Sriphasutha, deputy managing director of Viriyah Insurance, the country's largest motor insurer.

The industry estimates that there are 11-12 million insured cars - 3-4 million with voluntary coverage and 8 million with compulsory coverage.

Compulsory insurance covers injury or death of any damaged party, as required under the Protection for Motor Vehicle Accident Victims Act B.E. 2535 (1992).

Voluntary insurance provides cover against damage to the insured vehicle caused by collision, theft and fire, including liability for loss of life, bodily injury and property of a third party.

According to the Office of Insurance Commission, automobile insurance policies in force, including those for motorcycles, have increased 2.9% from last year to total 24.74 million - 19.77 million compulsory and 4.96 million voluntary.

Based on direct premiums, the motor insurance industry generated 64.15 billion baht in 2008, a rise of 4.5% from a year earlier. Compulsory insurance contributed 10.63 billion baht and voluntary insurance 53.52 billion.

Three categories of policy are available under voluntary insurance, according to premiums and coverage: comprehensive or first-class coverage; third-party liability & fire and theft (second-class); and third-party liability only (third-class).

The economic downturn has prompted more motorists to shift to third-class or even cheaper products that fall between compulsory and third-class voluntary features, said Mr Kritvit.

Many policyholders have also discontinued their insurance even in the compulsory segment.

"People are cautious about their spending," said the motor insurance veteran. "You will see the three-plus policies, which provide coverage of about 200,000 baht, selling like hotcakes."

Despite the poor economic environment and people's caution in spending, motor insurance remains on course for growth.