Paris attacks to impact Thai insurance sector
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THE PARIS terrorist attacks will indirectly affect the insurance industry in Thailand in 2016 as they will put pressure on trade activities and the tourism sector, the Thai General Insurance Association has said.
Before the attacks, the association projected non-life insurance premiums to expand by 3.5 per cent in 2016 and 2 per cent this year because exports in 2016 are xpected to return to positive growth next |year after a drop this year.
Based on the assumption of 3.5 per cent growth, total premiums would be Bt216.9 billion.
Government spending on investments will be a key trigger for insurance growth in 2016, said Arnon Vanvasu, president of the association.
If the government speeds up spending, the private sector will become more optimistic and |non-life insurance growth in 2016 might reach 7 per cent, Arnon |said.
The only factor that could prevent growth is what happens in the aftermath of Paris violence. If the violence spreads to many countries, spending would be interrupted |and that would badly impact on the Thai export sector and it accounts |for 70 per cent of Thailand’s gross domestic product, he said.
Insurance that relates to the export sector is trade credit insurance, marine insurance and miscellaneous insurance.
Premiums for political violence after the Paris attacks are expected to rise, Arnon said.
After 9-11, premiums for political violence in the global market surged 100 per cent, he said.
He said the terrorist attacks in Paris was not expected to influence people in general in terms of buying political violence insurance, but that was not the case for multinational companies, companies near political rally sites and companies in the deep South.
“However, we believe no one [insurers] will be happy with these premiums because the global economy is getting due to terrorism,” he said.
Political violence insurance is a miscellaneous insurance and accounts for less than 1 per cent of the total non-life insurance in Thailand.
In the first eight months, total premiums for non-life insurance grew only 1.65 per cent to Bt135.6 billion because of the drop in exports and the slowdown of domestic consumption.
Arnon said that the association hoped the industry could grow 2 per cent this year to Bt209.5 billion thanks to the government’s economic stimulus packages in the last quarter.
