MICROCAPITAL.ORG BRIEF: Muang Thai Life Assurance Taps Into Rural Market of Microinsurance

Muang Thai Life Assurance (MTLA), which is among the top five insurance companies in Thailand, is planning to expand access to its microinsurance program in rural areas of Thailand. The program has already been running for four years. Annual premiums range from 1,200 to 10,000 baht (USD 36 to USD 301) for coverage of 50,000 to 150,000 baht (USD 1,506 to 4519). Premiums are calculated based on factors such as the types of crops grown, the number of harvests per year, and the size of a client’s potential income. According to Mr. Sara Lamsam, president of MTLA, “at this preliminary stage, we have yet to expect [the program] to boost sales, but in the future our brand would definitely be in the forefront of their minds once the communities are financially strong enough and have a better understanding of the importance of savings.” As part of its microinsurance program, MTLA also educates people on money management and savings.

About Muang Thai Life Assurance:

Founded in 1951, Muang Thai Life is among the top five insurance companies in Thailand and is the country’s leading national underwriter of group life and health insurance loans. MTLA’s key products include life, disability, medical and accident insurance. The company has 100 branches throughout Thailand. In 2006, it had total assets of THB 38 billion (USD 1.2 billion). Microinsurance currently accounts for 10 percent of the company’s premium portfolio, but this number is expected to increase to 20 percent shortly.

Additional Resources:

Bangkok Post: “Muang Thai Tries Micro-Insurance,” http://www.bangkokpost.com/business/economics/27684/muang-thai-tries-micro-insurance

The IGP Network: “Thailand: Muang Thai Life Assurance Company, Ltd.” http://www.igpinfo.com/igpinfo/shared/network/muang_thai_life.html

Standard & Poor’s RatingsDirect: “Muang Thai Life Assurance Co. Ltd.” http://www.holding.fortis.com/debtinvestors/media/pdf/MuangThaiLifeAssuranceSP.pdf

Original Source Article:

Bangkok Post: “Muang Thai Tries Micro-Insurance,” http://www.bangkokpost.com/business/economics/27684/muang-thai-tries-micro-insurance

After pioneering event/music marketing services and educational activities to promote brand awareness and attract customers for several years, Muang Thai Life Assurance is building up a new marketing ground to tap into grassroots communities.

Sara Lamsam, president of Muang Thai Life Assurance, helps students release fish fry into a school pond at Pai in Mae Hong Son province as part of a school lunch project.

Instead of ramping up the number of salespeople to sell its life insurance products or offering any sorts of donations or contributions to rural people, Muang Thai Life Assurance, which dubs itself “the company of forward-looking people,” has initiated community development programmes under a micro-insurance marketing scheme that it believes will help better create good long-term relationships with villagers.

Under the programmes, local sales agents, special teams and volunteers stay and work closely for a month with rural communities, educational institutions, social activists, and villagers. They help upgrade community welfare facilities and shopping outlets to increase people’s incomes and educate them on how to manage their spending and saving more systematically. The goals are to strengthen the rural communities and transforming them into self-reliant and self-sufficient ones.

Over the past four years, the communities under the programmes have grown to span 500 sub-districts nationwide from those in Chiang Mai, Mae Hong Son and Chiang Rai to Hat Yai, Krabi and Ubon Ratchathani. Funding support varies based on the schemes and different demands of the communities.

“We have invested a lot each year in financially supporting the micro-marketing programme. The feedback from the rural communities on what we have done is great,” said Sara Lamsam, the company’s president.

“However, at this preliminary stage, we have yet to expect [the programme] to boost sales, but in the future our brand would definitely be in the forefront of their minds once the communities are financially strong enough and have a better understanding of the importance of savings.”

In the face of the global financial crisis and domestic economic constraints, consumers’ behaviour worldwide as well as in Thailand is expected to change radically, leading them to become more cautious about spending.

Micro-insurance is therefore expected to contribute more to the life insurance industry as a consequence, driven by rapidly expanding multi-distribution channels, notably through bank branches, Mr Sara pointed out.

Micro-insurance is a term increasingly used to refer to insurance characterised by low premiums and low coverage limits designed mainly to service low-income people and businesses not served by typical social or commercial insurance schemes.

According to Mr Sara, micro-insurance would play a critical role in driving the industry’s growth over the next three to four years, as several life insurers are now training their focus to the grassroots market.

Mr Sara forecast that by the end of next year, the number of total policyholders in the life industry would rise to 30% of the population from the estimated 25% at the end of this year.

The contribution of micro-insurance for Muang Thai Life is also expected to increase proportionally from currently 10-20% of the company’s premium portfolio.

In the first nine months, the company reported total premiums worth 15.897 billion baht, a rise of 25.2%. New premiums grew 33.8% to 6.756 billion baht and renewal premiums by 19.5% to 9.14 billion. Operating profits rose 48.4% to 1.34 billion, outstripping the 1.29 billion recorded for all of 2008.

According to Mr Sara, Muang Thai Life has currently made available micro-insurance products with relatively low premiums ranging from 1,200 to 10,000 baht a year for coverage of 50,000 to 150,000 baht.

Such premiums concentrate largely on basic protection features.

The rates are calculated based on many factors, such as the types of crops the community members grow, the number of harvests in a year, and the size of their potential incomes.

To accommodate farming incomes, the company has designed many payment options for the segment, such as daily, monthly and quarterly installments.

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