BKI deals with war on prices 

“The company has used risk inspection since the flood [crisis], but this year fierce competition has made us think that we should intensely use risk inspection to prevent underwriting losses,” Apisit Anantanatarat, president of BKI, said yesterday.
BKI has no plan to cut prices in personal lines such as motor insurance but can be flexible to get the job if risk inspection indicates that it can expect a profit.
For example, property insurance for condominium projects is being quoted at 0.02 per cent of the sum insured, down dramatically from 0.08 per cent earlier.
“The 0.08 per cent is quite low but the competition today obliges some insurance companies to offer premiums of 0.02 per cent. But our risk inspection shows that we cannot offer the lower price any more and we will lose from this insurance,” he said. 
Using risk inspection will keep the company’s profit from underwriting at no less than 10 per cent.
The fierce competition has put pressure on premium-income growth even though overall economic figures, including domestic new-car sales in the first half, showed improvement, said Panas Thiravanitkul, chief executive officer.
BKI has lowered its growth target for premium income to 5 per cent, to Bt16.66 billion, from 13 per cent to Bt18 billion, Apisit said.
The government’s mega-projects, crop insurance and the programme to provide personal-accident policies for low-income earners will contribute to BKI’s growth, based on the new premium target.
Premium income from underwriting mega-projects is expected to reach Bt70 million this year. 
The company aims to capture at least 10 per cent of the Bt270-million crop-insurance market.
The hazardous competition in motor insurance has made the company more pessimistic about its premium-income target, so it now expects a drop of 2.8 per cent this year.
However, BKI is still active in low-risk motor-insurance categories such as sport-utility vehicles and pickup trucks.

Motor market 
The motor-insurance market this year will provide 40 per cent of premium income, shrinking from 42 per cent last year.
BKI’s loss ratio from underwriting motor insurance is below 60 per cent and the company wants to keep that figure.
Panas said existing reinsurers had asked for more from BKI after seeing the profits, while new reinsurance companies offer commissions to BKI to entice the company into using them as its reinsurer.
Anon Vangvasu, executive vice president of BKI and chairman of the Thai General Insurance Association, said motor-insurance loss ratios |had risen to 65 per cent from 60 per cent, higher than other countries in Asean.
The loss ratio should not go over 62 per cent. 
The high ratio shows that the insurance industry is facing losses from the serious competition and this will not be good for the insurance market, he said.