Thai Health foresees profit

Business News - Saturday December 15, 2007

Thai Health foresees profit

Covering individuals will be more lucrative

CHAROEN KITTIKANYA

Thai Health Insurance, an affiliate of Thai Life Insurance, the country's second largest life insurer, expects a profit this year for the first time in several years thanks to business restructuring and operating cost reductions. According to managing director Varang Srethabhakdi, Thai Health expected to post a net profit of about 20-21 million baht this year. It is also looks set to clear accumulated losses worth about 50 million baht next year.

''The profitability is basically because we have restructured our portfolio and cut operating costs. We have shifted this year from the high-loss and highly competitive group insurance segment to profitable individuals,'' said Ms Varang. ''You will no longer see a surge in the amount of written premiums as we did in the past. We will from now on stress more upon the bottom line.''

Group insurance will now contribute only about 57% of the company's written premiums, significantly down from 70% in the past.

The company expects to write about 150 million baht in premiums this year, down from 170.65 million last year. The decline also reflects the 20% increase in premium rates last year.

The health insurance industry is currently worth about one billion baht a year, with Bupa Insurance the largest provider, accounting for more than 800 million baht. Because of its cautious underwriting approach, Thai Health Insurance's ranking dropped this year from second to third and it was overtaken by Bangkok Insurance.

The company currently offers health coverage to about 10,000 individuals and 25,000 groups. In previous years, it had more than 50,000 group clients.

According to Ms Varang, the health industry is naturally subject to a relatively high claim ratio of more than 70%, prompting several non-life insurers to phase out of the business.

Among them was Viriyah Insurance, the country's largest motor insurer, which has recently frozen the expansion of its health insurance business. Prasan Nilmanat, Viriyah's deputy managing director, said the company currently had health insurance premiums of less than 10 million baht.

''Health insurance offered by general insurers still has a lot of weaknesses,'' Mr Prasan said. ''Given the relatively low customer base, we (general insurers) have much lower bargaining power with hospitals. And above all, the medical expenses in our country are not cruelly high as charged in developed countries.''

Bangkok Post