Asset Insurance hikes auto premium

Taxi drivers make up the major part of Asset Insurance’s motor-insurance portfolio, but the loss ratio from claims involving this category of customer has nearly doubled from 58 per cent to 110 per cent in just the past two years, he said.
 The company had attempted to lower the loss ratio, but the figure did not come down by much as expected, he said.
 It therefore decided this year to adjust its strategy by increasing the premium for third-class motor insurance-plus by Bt2,000 to Bt10,000 instead.
“Most taxi customers purchase third-class motor insurance-plus, and each year we earn premiums of Bt200 million from this category. However, when compared to the claims, the current premium is unable to offset the claims.
“The new premium rate has caused [many] taxi-drivers to leave us, which we are happy about because we want to control the loss ratio and focus more on segmentation,” Somneuk explained.
Asset Insurance has now lowered its premium target for this year from Bt1.2 billion to Bt980 million, similar to last year’s level, as it will be losing much of its motor insurance from the taxi segment following the premium hike.

Cost-cutting
The company is also attempting to get its operating cost down to something closer to the average for medium-sized insurers, at 15 per cent.
Asset Insurance’s operating cost currently stands at 20 per cent.
Having a lower operating cost is an indicator of competitiveness, he said, pointing out that large insurance companies with annual premium of at least Bt15 billion generally have an operating cost of 7 per cent to 8 per cent.
The company also plans to become active in the direct sales channel in order to bring in corporate customers, as such business not only generates huge premium but also helps in the management of commission expenses, the executive chairman said.
Asset Insurance currently has high commission expenses from payments to agents and brokers.