Banks design alternative products to government's disaster-insurance scheme

After the Disaster Insurance Promotion Fund Committee announced premiums and conditions under the government scheme, banks and insurance partners prepared to sell natural-disaster insurance to suit customer demand, bank executives said.

Siam Commercial Bank (SCB) has divided its customers into two groups. The first group has assets valued at no more than Bt1 million, and they will be advised to buy risk coverage under the Disaster Insurance Promotion Fund. To the second group, customers whose asset value is more than Bt1 million, the bank will offer different insurance products, said executive vice president Smith Banomyong.

Under the government programme, premiums for households will be 0.5 per cent of insured value, or Bt500 for the maximum coverage of Bt100,000. However, Smith pointed out that this special rate was designed for the mass market. SCB, therefore, will aggressively reach out to customers who want coverage higher than Bt100,000 and can afford to pay for it.

SCB has partnered with Deves Insurance to offer products for home-loan clients covering natural disasters including floods. Deves provides minimum coverage under sub-limit conditions of 10 per cent of total asset value, and the maximum value should not exceed Bt50 million for total coverage.

This product was launched before the government scheme, but did not see much activity because prospective customers wanted to see the conditions and premiums of the disaster insurance fund before making a decision.

"We will adjust the existing products and reduce premiums for natural-disaster insurance now that the premiums of the disaster insurance fund have been announced," Smith said.

Non-life insurance accounts for 20 per cent of total premiums for SCB bancassurance. It aims to grow this business by 30 per cent over last year in line with increased premiums and expanded lending.

Kris Chantanotoke, executive vice president of Bank of Ayudhya (BAY), said it would focus more on customers who want simple conditions and higher coverage than the disaster insurance fund offers.

He said the bank had not promoted mortgage insurance much to customers. However, it will focus more on this after the disaster insurance fund announced its premiums and conditions. The bank’s products will pay a maximum of Bt300,000 for all risks except floods, which will see only Bt30,000 in pay-outs. Its mortgage insurance costs Bt1,499.

"We plan to set up packages with easy conditions for both households and business clients, especially SMEs [small and medium-sized enterprises], because the conditions of the natural disaster fund seem tight. The fund’s premium of Bt500 is suitable for new home-buyers and household customers who have assets valued at no more than Bt1 million," he said.

BAY projects total premiums of Bt7 billion, compared with Bt5 billion last year, of which 70 per cent is life insurance.