However, profitability could be constrained by intense pricing competition following premium deregulation for non-life-insurance products.

Insurers that protect their business margins by monitoring product risk-reward metrics and developing efficient business operations are more likely to buffer potential volatility from the intense competition, particularly in the motor segment, which has a steadily weakening loss ratio.

Fitch Ratings expects new market players to emerge from possible amalgamations and the regulator’s framework for new product innovations, which could further increase competition.

Newcomers could also promote innovation in products, services and administrative management, which would further reinforce the industry’s business capacity.

Fitch expects Thailand’s non-life-insurance sector, which holds stable and liquid investment assets, to weather any business volatility and meet its obligations.

The sector exhibits consistently solid capitalisation and is likely to maintain capital ratios above the regulatory minimum following the 2019 implementation of the second phase of the risk-based capital framework, according to the Office of Insurance Commission.