Life insurance business shocked! “COVID-19” pulls in purchasing power, customers parade “cancel – not renew” policy again, revealing the first nine months of ’63 Total policy discarding total 6.7 hundred thousand copies, causing profit of the life insurance business disappeared ten billion. “Bangkok Life Assurance” pointed out in the fourth quarter of 2020, the cancellation numbers accelerated. After the end of the insurance premium payment measures for the inner OIC, the trend is continuing to rise, expected this year to be higher than 20% of the new policy for the full year.
The reporter reported the latest information from the Office of Insurance Commission (OIC) during the nine months of the year 2020 (Jan-Sep’20) found that the systematic life insurance policy has been canceled and terminated. (lapse) Total 676,017 issues, divided into 331,715 lifetime life insurance, 190,388 savings insurance, 76,979 personal accident insurance, 56,902 term life insurance, 11,913 group insurance, 4,341 copies of investment-related life insurance (unit linked). , 2,364 pension insurance, 1,401 universal life insurance and 14 other life insurance forms.
This corresponds to the rate of life insurance policyholders per capita declining to 39.50% from 39.65% in the same period last year. Which contributed to the profit of life insurance companies in the first nine months of 2020, the whole system decreased by 11,818 million baht, leaving a total net profit of 28,974 million baht. The system increased 20.78% to 175,883 million baht.
Termination policy
M.L.Jiraset Suksawat, President and Chief Executive Officer Bangkok Life Assurance PCL (BLA) discloses “Prachachat Business” that during the 1-2 quarter of the year ’63, OIC has issued measures for insurance companies to provide assistance and alleviate the suffering from the impact of COVID-19. For those who are affected, such as a waiver of premium payments, exemption of interest in the event of a life insurance policy expires, exemptions or cuts down on the policy loan interest, etc., which assistance measures that all companies take to end at the end of September 63, which the OIC extended the time to help measures phase 2 until the end of the year ’63. But it is the characteristics for the company to consider on a case by case basis
Therefore, since the fourth quarter of 2020, the life insurance system will begin to see signs of higher policy termination. Due to the expiration of the great period, many customers are not paying for their life insurance premiums. Which after the expiration of the payment period for 30 days in the life insurance system It will allow customers to make automatic policy loans (automatic premium loan: APL), where the insurance company will borrow from the cash value of the customer policy in order to pay the premium instead, so they can see that the policy loan has a higher proportion. This situation has a negative impact on both customers and insurance companies.
Remind customers to lose benefit
Mr. Brian Smith, Managing Director and Chief Executive Officer Allianz Ayudhya Capital Public Company Limited (AYUD) said that the year 2021 was a very challenging year. Because insurance sales do not grow due to the economic downturn And worsening the effects of COVID-19 Although protection & health products are gaining attention, purchasing power is not available. This will affect the signs of policy termination in 1Q21 will be even higher.
“Now we have to come up with a plan to tell our customers that It will be very difficult to cancel the policy. Because if it is health insurance, a new health check is required While savings insurance, the rewards may not be the same. Because global interest rates are very low, ”said Brian.
Canceled up to 20%
Mr. Pichet Chearmanee Thavisin President of the Actuarial Association of Thailand said During the hamburger crisis, the rate of cancellation and termination rates accounted for approximately 20% of all policies that year. If compared with the COVID-19 crisis The assessment seems to be harder because it directly affects the Thai economy and the purchasing power of Thai people. But it will be intermittent in response to the COVID-19 epidemic situation. Which is expected to drag until 3Q21, but will drag profits, life insurance business has been deeply absorbed since 1Q21.
However, savings insurance products that pay low interest are considered high risk of cancellation. Especially if in the year 2022 US Treasury yields (Bond Yield) began to rebound higher. Opportunity to see consumers cancel their policy in order to buy a new one due to higher interest rates
“When customers buy at that time, the returns are low but have to pay high premium prices. Previously, maybe 1-2% savings insurance interest, but in the future, assuming they give us 3-4% interest, the customer would not be difficult to decide to abandon the policy to find a better return, ”said Pichet.
–
