Dhipaya manages a foothold in Laos
Insurance firm aims to have regionwide presence in five years
Major non-life insurance firm Dhipaya Insurance aims to be a regional company within three to five years, starting with Laos before expanding to Cambodia, Myanmar and Vietnam, completing its CLMV footprint.
Managing director Somporn Suebthawilkul said the company had received a licence from the Laotian authority to sell both life and non-life insurance. In the first stage, it will focus on construction all risks (CAR) insurance to cash in on the rising number of construction projects in that country.
Dhipaya has been selling CAR for two weeks, and the office in Laos is expected to open officially in August.
“Many Thai construction companies have been awarded jobs there, so we have to follow them. There is room to grow in Laos as the existing players there don’t have much experience in non-life insurance,” he said.
The coming Asean Economic Community is enhancing the construction of infrastructure projects by the public and the private sectors in CLMV, which opened the opportunity for Dhipaya to establish a footprint in Laos before moving into the other three countries, he said.
The company in Laos is named Tipaya Insurance (Laos). With registered capital of Bt60 million, it was established by Dhipaya Group in cooperation with two other Thai insurance groups, Panichewa Group of Companies and Southeast Insurance Group of Companies. They are the majority shareholders with 80 per cent, and the remaining 20 per cent is held by individual Laotian investors.
Direct investment overseas
Under the regulations of Thailand’s Office of the Insurance Commission, Thai insurers’ direct investment overseas may not exceed 10 per cent, so the investment in Laos had to be made under a group of companies. Dhipaya Insurance holds a 10-per-cent stake in Tipaya Insurance (Laos), Somporn explained.
Tipaya will promote life insurance in Laos in the second half of the year. These products were not given immediate priority as their premium income is likely to be lower than from non-life products. Dhipaya aims for total premium income of US$6 million (Bt195 million) in the first year of operation of the Laotian venture.
“In geographical terms, Thailand is at the centre of the upper Asean region, so we have to capture CLMV before Singapore and Malaysia because insurance business in CLMV requires development,” he said.
Dhipaya hopes to set up a company in Cambodia this year after a feasibility study. Cambodia requires registered capital from foreign insurers at $7 million. Myanmar has not yet licensed any foreign insurance companies.
In Thailand, Dhipaya Insurance’s premium income in the first six months of the year will be below target because of the delayed public-sector construction projects. The company is optimistic that it can meet the premium target of Bt27.58 billion this year after the military’s ruling National Council for Peace and Order resumes infrastructure projects, some of which can be implemented quickly.
Dhipaya is a state enterprise in which the Finance Ministry is a major shareholder, so the company has a crucial role in securing insurance for public projects.
The resumed infrastructure projects, however, might not be enough to achieve this year’s target, so the company decided to develop a new product called Tip Plus to tap individual customers to offset the decline in premium income in the first half, Somporn said.
Transactions by individual customers will be 60 per cent of the total this year, up from 40 per cent in 2013.
