Thailand’s life insurance industry, which has witnessed decelerating growth rates since 2015, will decline in 2020 owing to the prevailing challenges aggravated by the macroeconomic impact of Covid-19.

This is according to GlobalData insurance analyst Madhuri Pingali, who included the cost of technical and practical changes required to meet the new reporting standard set out by IFRS 17 in a list of challenges faced by insurers in Thailand.

“Life insurers in Thailand have been under pressure due to systemic challenges such as low awareness, aging population, declining GDP growth rate and prolonged low-interest environment,” she said.

“Downward revision in insurance prices due to the introduction of new mortality rates and the new regulatory framework, especially the implementation of IFRS 17 and 9, are set to further exacerbate the problems.”

GlobalData estimates that life insurance premiums will decline for the second consecutive year by 1.6% in 2020.

But the industry is expected to recover from 2021 and is forecast to grow at a compound annual growth rate (CAGR) of 2.1% from 2019 and 2024.

Pingali referenced the recent increase in the sale of Covid-19 related life insurance products to suggest the roots of this recovery is already being seen in Thailand.

“The projected GDP contraction in 2020 due to the Covid-19 outbreak is expected to reduce personal savings, leading to a decline in the life insurance business in 2020,” added Pingali.

“The spike in the sale of Covid-19 insurance products in the last couple of months indicates that despite the immediate setback, the industry stands to benefit in the long-term due to increase in consumer awareness following the outbreak.”