Thai Insurance Sector at 'Critical Crossroads' Amid Climate and Digital Pressures
Industry growth is sustained, but escalating natural disaster risks, fiercer competition, and the EV insurance crisis demand immediate, digital-focused adaptation
- The insurance sector is threatened by severe climate change, which makes risks harder to predict and significantly increases underwriting costs.
- Economic volatility and intense competition have created an urgent crisis, particularly in the Electric Vehicle (EV) insurance market where unsustainable pricing has led to major financial losses.
- To survive, the industry is being forced to adapt to digital pressures by using data for personalized policies, leading to an expected wave of market consolidation.
The Thai insurance industry is facing unprecedented pressure from global economic volatility, severe climate change impacts, and a sharp increase in consumer expectations, according to the head of the country's general insurance body.
The sector is standing at a "critical crossroads," challenged by a slowing economy, inflation, and the lingering anxieties from the pandemic, which have driven up both risk and policyholder demands.
The insights come from Somporn Suebthawilkul, president of the Thai General Insurance Association, speaking in an interview originally reported by Wichulada Pakdeesuwan of Krugthep Turakij.
Somporn highlighted the "impact of disasters and climate change" as one of the most severe threats, making risks harder to predict and significantly driving up underwriting costs.
This is creating an imbalance between the rising cost of risk and market demands for affordable, comprehensive coverage.
Growth Masked by Underlying Crises
Despite these challenges, the industry demonstrated resilience in the first half of 2025, achieving a growth rate of 3.5 per cent, surpassing the initial full-year forecast of 2.5 per cent.
Somporn attributed this recent outperformance partly to external factors, noting that pre-emptive purchasing linked to the impending Trump tariffs led to a temporary surge in insurance demand for imports and exports.
However, the internal composition of growth reveals weaknesses: Motor Insurance, the largest segment, saw a decline in its growth rate due to slow new car sales and fierce price wars, while Health and Life Insurance continued to grow strongly as the post-COVID era amplified consumer awareness of personal health risk.
The President noted that the return to normal political conditions and stable-if-slow global economic growth suggest greater potential for the Thai insurance sector, but only if fundamental challenges are addressed.
The EV Insurance Ticking Clock
One of the most immediate crises is the viability of Electric Vehicle (EV) insurance.
After approximately three years of underwriting, many companies are struggling, forcing some to withdraw from the market or substantially raise premiums.
"Fierce competition previously led to pricing below the actual risk, resulting in current Loss Ratios exceeding 100 per cent," Somporn explained.
The Association and its 15 top member companies will meet within the next two months to review the premium structure. A clear solution for the EV insurance dilemma is urgently sought, with clarity expected by mid-2026.
Path to Survival: Digitalisation and Consolidation
For the industry to achieve sustainable growth, adaptation is mandatory. Somporn identified two major structural trends:
Digital Transformation: The widespread use of Big Data and online platforms allows for the development of personalised, flexible policies, meeting the demands of the modern consumer. Companies must invest in human capital that possesses both insurance knowledge and technological expertise to secure a long-term competitive edge.
Market Consolidation: Driven by cost pressures and unviable pricing, the industry is expected to see more mergers and acquisitions. Smaller players that cannot manage the financial risk posed by unrealistically low premiums will be forced to seek alliances or merge for survival.
The DTTAM leader concluded that for Thailand to emerge as a regional insurance hub, it must embrace international collaboration—through investment, data exchange, and the adoption of global standards—a goal promoted by events like the TRC Thailand Reinsurance Conference.
