Insurance industry cautiously optimistic on surge in EV sales

He, however, cautioned that while this was a positive scenario, EV cars were still new for the insurance industry.

During a press trip to Japan over the weekend, he pointed out that when compared to an internal combustion engine (ICE) vehicle — a car powered by conventional, oil-derived resources such as petrol, gas or diesel fuel — an EV has a higher loss ratio.

He explained that while most car spare parts can be repaired by general garages across the country, EV cars require skilled mechanics with expertise in EV, which is now limited to the brand's service centres.

Meanwhile, EV spare parts, particularly batteries, are not repairable, which means if one gets spoilt, the owner must purchase a new one. A new battery costs roughly 50-60% of the price of the car.

Furthermore, as a vehicle, EV has its own service life. While other cars' wrecks can be sold in the secondary market for disassembling their spare parts, EV wrecks have no value at all.

"All I want to say is that the cost of insuring an electric vehicle is quite high. As a result, in expanding our portfolio into the EV market, we must be more vigilant," he said.

He expressed his concern that many insurance companies in Thailand were currently competing to offer the most affordable rates in order to attract the majority of EV car owners.

The move, he believes, is lacking in prudence and overlooks the EV's loss ratio.

He estimated that if those insurance companies were unable to review new contracts to increase premiums within the next two years, the companies' cash flow and debt stability would suffer.

“We [Bangkok Insurance] would need to continue researching the EV market in order to provide the right package to our clients while maintaining our healthy growth and profits. Despite these concerns, the EV market remains one of our top priorities in 2024," he said.

Apisit cited one report that showed the country's EV sales this year were up ten fold from last year.

According to Kasikorn Research Centre (KResearch), Thailand has the potential to develop into a regional EV production hub, as geopolitics and protectionism compel automakers to relocate their manufacturing.

Meanwhile, the automotive industry is in transition due to the growing popularity of EVs around the world, including Thailand.

In addition, the 40th Thailand International Motor Expo, which took place from November 29 to December 11, saw a significant increase in vehicle bookings, with 53,248 units sold. Although the majority of the vehicles were ICEs, customers also expressed a strong interest in EVs.

Apisit predicted that with this increasing enthusiasm, the demand for EV insurance would undoubtedly rise.

Apart from the EV market, the Bangkok Insurance CEO expects to improve their products such as home insurance, asset insurance, and personal insurance through more personalisation.

"We intend to launch a new insurance package to meet the needs of pet owners, senior citizens, travellers, and people with other lifestyles. We anticipate strong growth in travel insurance as tourism returns to normal after the pandemic," he noted.

Meanwhile, the company intends to use an embedding marketing strategy to increase insurance premium sales, he revealed.

Embedding marketing is a method of selling insurance in collaboration with other companies, such as telecom providers and retailers.

"Instead of paying only monthly mobile service fees, customers would be offered an affordable price of around 30-50 baht per month to get some protection from insurance," he explained.

His disclosure came as the company's growth rate exceeded expectations. Bangkok Insurance's total premium income was 21.982 billion baht in the first nine months, up 12.5% from the same period last year.

Meanwhile, the combined net profit from insurance and investment earned the company 2.546 billion baht after taxes. Bangkok Insurance expects to end the year with revenue of around 30 billion baht.