Thailand's insurance market is expected to eke out only moderate growth this year because of cloudy economic prospects and weak demand.
The Thai Insurance Brokers Association has predicted the overall market will grow at less than 11% this year from 644 billion baht in 2013 when the growth rate was 13%.
"New customers normally account for 20% of insurance premiums each year, but their number may be lower than 20% this year," said president Jittiwut Sasibutra.
The motor, property and casualty sectors are likely to see significant drops, while life insurance is expected to be unaffected.
Last year, life insurance contributed 441 billion baht, with the remainder from general insurance.
Car insurance will be hit by sales projected to drop 30-40% this year from last year's 1.33 million cars.
According to Fitch Ratings, life insurance will continue to grow steadily, underpinned by low policy penetration, an ageing population and tax breaks.
Bancassurance is ikely to continue to drive growth as insurers seek strategic relationships with banks, while insurers with strong agency networks will be able to support their profitability by focusing on higher-margin products.
Bancassurance has been the key contributor to insurance growth in recent years. Premiums last year were almost double those in 2010.
Insurers with an exclusive partnership with the top four major banks are the main beneficiaries because of the banks' extensive branch networks, while other insurers are seeking strategic relationships with banks.
The industry's capitalisation is likely to remain solid, which will support growth in the medium term.
Most major insurers are likely to boost their agency capacity and productivity, as policies sold through agents are generally traditional products with a wider margin, while bancassurance is associated more with investment products with thinner margins. Agencies and bancassurance account for almost 95% of premiums.