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Published on October 12, 2007

The shift to the hospital segment came about after findings in the insurer's latest annual research.

Results from the AIA Life Matters Index, carried out by research firm TNS Global in Singapore, Malaysia, Thailand and Hong Kong, showed not only was there a gap between perceived and actual medical costs, but also the 4,000 respondents interviewed were ill-prepared for an unexpected critical illness.

What is alarming is that while 47 per cent of Thais expect their families to cover their medical expenses, 83 per cent have no regular savings, and 57 per cent believe they do not have enough money for retirement, said AIA Thailand executive vice president and general manager Thomas White.

With 74 per cent believing medical insurance for retirement is not a priority and 58 per cent thinking they cannot afford it, the research findings mirror the Bank of Thailand's recent concern about the lack of access to and education about financial products.

And because of spiralling medical bills - inflating at 20 per cent this year, with expenses in the top-tier hospitals rising as high as 30 per cent from medical tourism - the insurer must consider offering less-costly insurance premiums, said Dholmanus Bunnag, assistant vice president for AIA's Accident and Health Department.

"Top hospitals are not willing to give us a price plan", said White. "They're able to attract medical tourists."

He said AIA was currently negotiating with groups of mid-range hospitals and drafting a business plan to offer more flexible insurance deals.

"For example, there are no five-star hospitals in northeastern Thailand. Why should customers there pay five-star premiums?" said Dholmanus.

Thailand's largest life insurer will also beef up its other distribution channels, in line with what Martin Sullivan, president and CEO of the American Insurance Group, AIA's parent company, described to a Lehman Brothers analyst last month as "developing alternative distribution centres".

White has brought in a direct-marketing expert from South Korea - where such sales channels are particularly strong - to develop its Thai operation.

With bancassurance products now offered by Ayudhya Bank, UOB and Tisco, White wants to see at least 25 per cent of sales come from non-agent sources.

Ki Nan Tsui

 The Nation