Fitch Ratings has said the second phase of Thailand's Risk-Based Capital (RBC 2) framework, which is in the process of being drafted, will enhance insurance companies’ risk profiles.
The RBC 2 regime is being formulated in line with the terms of the ICP17 (Insurance Core Principles) Capital Adequacy standards.
Fitch Ratings said the RBC2 framework will make insurance companies more closely aligned with those of their international peers under similar solvency regimes.
Jeffrey Liew, head of Fitch's Asia-Pacific insurance ratings group, at an industry briefing organised by Fitch Ratings (Thailand) Limited in Bangkok, said: “The more robust rules will increase confidence around the financial strength of the sector, but several challenges lie ahead, in particular for medium and small players that will need to cope with potentially more stringent capital requirements.”
Fitch's briefing also included an opening keynote speech by Chuchatr Pramoolpol, deputy secretary-general, Office of Insurance Commission, who outlined the outlook for Thailand's regulatory framework and the changes in investment and solvency rules.
Timetric data and forecast on Thai life sector
Life insurance was the largest segment in the Thai insurance industry, accounting for 60.7% of the industry’s gross written premium in 2014, according to the report, Life Insurance in Thailand, Key Trends and Opportunities to 2019, which is available at Timetric’s Insurance Intelligence Center. (IIC).
The IIC report explains that the Thai life segment’s gross written premium grew from THB253.6bn (US$8bn) in 2010 to THB433.9bn in 2014, at a review-period CAGR of 14.4%.
According to the IIC, the Thai life sector’s gross written premium is expected to rise from THB433.9bn in 2014 to THB802.8bn in 2019.
The IIC explains that Thailand’s modern tax system, simple tax structure and low tax rates are favourable for the segment.
It says the implementation of awareness programmes to provide customers with financial education will also support the segment’s growth.