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Published on April 29, 2008

Ki Nan Tsui

The Nation

Rice prices may not be good at the moment for consumers, but farmers are benefiting from the record margin, with a tonne of rice selling for as much as Bt35,000 wholesale recently.

AIA Thailand, the largest life insurer by annualised gross premiums and assets under management, is keen on further tightening its grip of the grass-roots markets with their new single-premium insurance product.

With the new policy - 1 Pay Life - farmers, whose incomes are not known for consistency, will pay a one-time premium for lifetime coverage until 99 years old, said Sataya Tepbunterng, deputy general manager and senior vice president for agency distribution and marketing.

Last year, the insurer sold about 60,000 new ordinary life policies to farmers and families, totalling Bt400 million worth of first-year premiums - 5 per cent of gross first-year premiums. The new single-premium product, which has been selling for a month, is in line with the company's new "Dream Protector" marketing campaign that was officially launched yesterday. To win the hearts and minds of upcountry folk, visual cues like a couple with the husband in civil-servant uniform and his pregnant wife emerging from a rural hospital, have been inserted throughout the television commercial, said general manager and executive vice president Tom White.

The commercial comes at a time when runners-up like Ayudhya Allianz CP Life and Thai Life Insurance are aggressively marketing and branding themselves and their products. As the pie gets bigger, these companies have been eating into market leader AIA's share, reducing its portion in total premiums to 43 per cent last year, Thai Life Assurance Association statistics show.

Despite high brand awareness, 94 per cent as of last year's pan-Asia survey done by parent company the American International Group, awareness at the grass-roots level remains low, said White. The low penetration rate of about 18 per cent is due to a lack of financial knowledge among the rural public. But White believes AIA's about 6 million - and growing - agents will have enough reach upcountry to maintain its market-leader position, which it has held for 20 years.

With the American International Group posting the biggest quarterly, sub-prime-induced loss in its 89-year history in February, US$5.29 billion (Bt168 billion), the pressure for the emerging-market team to grow the company was there. But Mark Wilson, president and chief operating officer of AIA Hong Kong and who oversees six Asian markets, remains optimistic about prospects in the region.

Wilson believes the current double-digit growth in the life-insurance sector can be sustained for at least a decade, particularly in Thailand, with its sound economic fundamentals and good infrastructure.