Viriyah looks beyond auto

As the country’s biggest automotive insurer for decades, Viriyah Insurance is exploring more expansion into other areas, targeting revenue from non-auto sources to provide 20 per cent of its total premiums within five years.
Currently, non-car-insurance business accounts for 9-10 per cent or Bt2 billion of its total premiums, which are forecast to reach Bt25 billion to Bt26 billion this year. The expansion comes as consumers gain more knowledge on risk protection and need more insurance services.
However, small and medium-sized clients are still the company’s targeted group, as they have low risk.
Viriyah has been the biggest car insurer in Thailand since 1992, currently with 25 per cent of the market share, but now it also is one of the largest in Asean.
Revenue from car insurance accounts for more than 90 per cent of its total premiums in Thailand. It reported that car-insurance premiums generated Bt12.04 billion, up by 18.52 per cent, in the first half of this year.
In addition, non-auto premiums jumped 27.6 per cent to Bt1.11 billion in the same period.
Total premiums are set to |grow 20 per cent to Bt26 billion this year.
Regional trade liberalisation in 2015 will also create business opportunities for health and transport insurance.
Kritvit Sriphasutha, deputy managing director of Viriyah Insurance, said the auto segment was still the company’s core business.
It now manages 3 million policies, of which compulsory insurance accounts for 2 million.
The car industry is growing in line with increased purchases. It is estimated that 500,000 more cars enter the market per year.
The company expects to manage 30 per cent of their insurance policies. It is expected that car sales will reach 600,000 units next year, of which Viriyah targets insuring 180,000.
“Car demand has carried on since the devastating flood last year. New policies are exceeding our target, but what we need to achieve is renewals,” said Kritvit, pointing out that the company’s renewal rate is 70 per cent.
Arnon Opaspimoltum, deputy managing director of the company, said its non-auto business had seen average growth of 25 per cent per annum for five or six years. However, rising market needs are still creating business opportunities.
In addition, the company will concentrate on small customers rather than big companies.
“What we focus on now is to match our facilities and capacity with our customer base,” said Arnon, adding that Viriyah also provided industrial risk insurance but was more careful in the property segment.
The company has to ensure sufficient coverage through reinsurance.
Viriyah’s average loss ratio is no more than 60 per cent, but the ratio increased from 58 per cent to 61 per cent last year because of the flood crisis.
The flood directly hit property owned by the company’s customers. The loss ratio is expected to grow to 62 per cent in the first half this year because of continued compensation payments from last year.
Arnon added that the company had concentrated on risk assessment and ensured that its product development matched its capability.
In addition, it needs to study more factors, not only market demand but also the economic environment.
The ageing of Thai society has encouraged the company to focus more on risk in its health-insurance business.
The product is also one of the
 company’s key services it will rely |on in the coming single market under the Asean Economic Community (AEC).
Moreover, the company will also enjoy more benefits from cross-border transport, as cars or trucks from other Asean countries passing through Thailand will need insurance, especially cargo insurance and carrier liability.
Kritvit said the company was considering setting up branches outside Thailand and was looking for partners in potential countries in preparation for the bigger demand once the single market is implemented.
So far, the company has already expanded into Laos, Cambodia and Malaysia, while in Myanmar its business is managed by its representative.
Kritvit expressed concern about recruitment in 2014-2015 given tougher competition in the market. As a result, the company has focused more on human-resource development and enhancing employee loyalty.
“We foresee that our market share will drop slightly after full implementation of the AEC because of fierce pricing competition, but we’re not jumping into that field,” Kritvit said.