Thailand’s non-life insurance sector is abuzz with cautionary tales and warnings as rumors swirl about a prominent Chinese electric vehicle (EV) manufacturer facing financial turmoil in the Thai market. The speculation hints that insuring EVs might already be a losing game, prompting insurers to reassess their strategies.
Insurance executives are grappling with mounting concerns over potential liabilities, especially when it comes to repair claims involving unavailable parts. The situation has stirred unease among local insurers who fear escalating risks associated with insuring electric vehicles in an uncertain market landscape.
In response to these challenges, several Thai insurance companies have proactively decided to raise premiums on EV policies. This move is a strategic adjustment reflecting the increasing complexities and uncertainties surrounding EV insurance. As one executive noted,
“Annual premiums that were once comfortably set at around 20,000 baht are now soaring to new heights ranging from 25,000-28,000 baht per vehicle.”
The escalating premiums are particularly noticeable for brands that lack robust service infrastructures and grapple with unreliable supply chains. These factors compound the risks for insurers and necessitate premium hikes to mitigate potential financial pitfalls down the road.
Amidst this tumultuous environment, some insurers have taken more drastic measures by suspending coverage for specific EV brands or models. Their decisions are fueled by concerns related to intricate logistics, limited availability of skilled technicians, and exorbitant repair costs entailed by brand-exclusive service centers.
Apisit Anantanatarat, CEO of Bangkok Insurance (BKI), shed light on the cautious approach his company is adopting towards EVs due to high loss ratios. He shared insights into BKI’s evolving stance on EV policies:
“Our experience shows that the average claims ratio for our EV segment hovered around 67-68% in 2024, with certain brands nearing the critical threshold of 100%. Despite improvements from previous years, where ratios exceeded 120%, we remain vigilant given the elevated risks inherent in the EV market.”
To navigate these turbulent waters more effectively while containing costs, BKI is exploring avenues such as investing in its own network of EV repair facilities through collaborations with Chinese partners. By establishing general garages capable of servicing a wide range of vehicles, BKI aims to reduce its reliance on costly brand-specific repair centers—a strategic move aimed at optimizing operational efficiency amidst industry upheavals.
Guillaume Mirabaud, CEO of AXA Insurance Thailand, highlighted their commitment to data-driven risk management strategies within the EV segment:
“We acknowledge minor losses within our EV portfolio but maintain a steadfast commitment towards sound pricing practices based on meticulous risk assessments per vehicle model.”
Mirabaud emphasized AXA’s resolve not to engage in price wars but instead focus on accurately pricing each policy based on comprehensive risk evaluations—a prudent approach amidst industry volatility.
As challenges persist within Thailand’s dynamic insurance landscape—particularly concerning fluctuating prices driven by aggressive maneuvers from Chinese automakers—insurers face an uphill battle balancing profitability and risk mitigation in an ever-evolving sector.
In conclusion,
the narrative surrounding electric vehicle insurance underscores a pivotal moment where industry players must navigate carefully through choppy waters marked by uncertainties and shifting paradigms—an era demanding resilience and adaptability from all stakeholders involved.
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