Tokio Marine promise high return

Although savings insurance is not one of its key products, the company wants to enhance brand awareness by allowing a narrow margin and cutting the incentives of agents so that it can offer a higher rate of return to policyholders, said Sompote Keitkraival, senior executive vice president for the agency department.
Tokio Marine will sell its new Hero 10/1 savings insurance at next week’s “Money Expo 2012”, where it expects the product to attract Bt100 million worth of premiums.
Agents will also introduce the product to existing customers and policyholders at other companies, he said.
Hero 10/1 is a single-premium insurance with a guaranteed internal return rate of 4.21 per cent, or 4.95 per cent before tax.
Sompote said the company had invested in bonds rated “A+” to lock in a high return and ensure it can offer such a return to policyholders.
General insurers cannot normally offer guaranteed-return policies, as they have to increase their capital in line with the risk-based-capital rule, but Tokio Marine’s capital ratio of 440 per cent far exceeds the requirement of 125 per cent, thus enabling it to do so, the executive said.
Hero 10/1 will, however, only be offered during Money Expo 2012, because of the internal rate of return being so high.
Sompote said the company would launch new pension-insurance products at the event in a bid to attract younger people who want to pay short-term premiums and get a pension quickly.
“Customers told our agents that they wanted to receive a pension before retirement, therefore we designed the insurance to meet the demand,” he said.
The two annuity, or pension, insurance products to be launched next week are Pension Choice 5 and Pension Choice 6.
Annuity insurance currently accounts for 62 per cent of the company’s portfolio, followed by savings insurance at 21 per cent and whole-life insurance at 15 per cent. The remainder is personal accident insurance.
The proportion of pension insurance this year could surge to 70 per cent, in line with the rise of the country’s ageing society, he said.
Sompote said Tokio Marine’s premiums per pension policy were Bt51,572 higher than the industry average of Bt20,000. The sum insured averages Bt400,000, and the company has 2,028 such policies.
High inflation is not likely to affect the company’s business as most of its customers are in the upper-income bracket, he added.
Agencies are the company’s key sales channel, with premiums in the first four months of the year coming in at Bt230 million via this source. Of the total, Bt125 million was new business.
The company is confident it can achieve the target of Bt600 million in new business and Bt640 million in renewal premiums for the full year, Sompote said.
Hiroshi Tateishi, president of Tokio Marine Life Insurance (Thailand), said the local unit expected to break even within three years.