This year's slow growth in vehicle sales is expected to affect the general insurance industry, as growth in new motor insurance will not rise above single digits for the first time in five years, General Insurance Association president Chai Sophonpanich said yesterday.

"So far this year, sales of new cars have shown only 3-per-cent growth. As around 60 per cent of total premiums in the industry are generated from motor insurance, this will affect this year's motor-insurance premiums," Chai said.

About 70-80 per cent of new-car buyers purchase insurance coverage on the advice of their finance companies, and premiums from this business account for around one-third of total motor insurance.

"For old cars, people tend to shift to low-priced policies. Some choose to buy only third-party coverage, the minimum required by law," said Chai.

Slow growth in the insurance industry generally has also affected Bangkok Insurance, of which Chai is chairman and president. However, he said his company made a satisfactory profit, mostly from its investment portfolio.

Chai said there was a huge inflow into the stock market early this year, and Bangkok Insurance took a profit by selling some overvalued securities and shifting the funds into bonds.

As a result, its investment in bonds rose from almost Bt122 million last year to Bt338 million this year. The company's total investment portfolio is around Bt10.7 billion.

Given the current slow growth in Thailand's economy and strong competition in the insurance industry, Bangkok Insurance is focusing on building brand awareness.

"When more people know about us, more people will come to us, and we can choose good customers," said Chai. "We can't rely on existing customers alone. If they are bad customers, the company will lose, rather than benefit."

As the company will celebrate its 60th anniversary next year, Bt60 from each policy will be donated to His Majesty the King's Chaipattana Foundation from September this year to October next year. Chai said Bangkok Insurance also had other plans for donations and contributing to society throughout the year.

Piyarat Setthasiriphaiboon

The Nation