The severe impact of COVID-19 on Thailand's economy will see the country's non-life insurance market contract by 5.6% this year, forecasts by GlobalData suggest.
The data and analytics firm explained how the country's motor insurance sector, which accounts for 70% of its non-life business, will take the biggest hit due to a significant reduction in new vehicle sales.
“Increasing household debt, prevalent pressure on auto financing and recent lockdown restrictions due to coronavirus outbreak and its economic impact is expected to impact automobile sales in Thailand,” said GlobalData insurance analyst Madhuri Pingali.
“This will in-turn impact motor insurers' business, which is projected to shrink by 6% in 2020.”
Thailand's non-life insurance industry is expected to bounce back next year and enjoy a compound annual growth rate (CAGR) of 4.1% up to 2024.
GlobalData's forecasts are shown below:
Property insurance is the second-largest business line within Thailand's non-life insurance segment with an 18% market share.
The sector is expected to benefit from increased infrastructure investments as the government has allocated more than THB300bn ($9.52bn) towards transport and public utility development projects.
However, commercial and retail construction activities are expected to decline owing to the lockdown restrictions and ensuing economic slowdown. As a result, the property insurance market is also projected to decline by 4.1% in 2020.
“Although, Thailand was successful in containing the spread of virus, the economic contagion has affected numerous industries leading to contraction in Thailand’s non-life insurance market,” Pingali continued.
“The fiscal policies adopted by the government to revitalise domestic demand will be key to revival of non-life insurance market in Thailand.”
Author: Chris Seekings
Image credit: Shutterstock
Graphic credit: GlobalData