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Insurance

Thai insurer offers world's first auto coverage to start and stop with engine

Thaivivat and telco AIS aim to cut policy costs to attract uninsured drivers

Thavivat Insurance provides an on-demand insurance product, using AIS narrowband IoT (Photo courtesy of Advanced Info Service).

BANGKOK -- A Thai insurer has introduced the world's first insurance policy that automatically switches on when the driver starts the car, aiming to cut the costs of automotive cover by as much as 40%. 

Thailand's mid-sized nonlife insurer Thaivivat Insurance has teamed up with the nation's largest telecom service provider Advanced Info Service to integrate internet of things solutions into its minute-by-minute motor insurance service.

Users will be provided with a SIM-card-embedded tracking device to plug into their vehicles. Through Advanced Info Service's network countrywide, the device sends data to the insurer that turns on motor insurance coverage when the car starts and off when the engine is shut down. 

The service launched on Monday and is designed for motorists who drive less than four hours a day. This on-demand service could save policy holders up to 40% on premiums, said Jirapan Assawathanakul, president and CEO of Thaivivat.

"The partnership will give customers a better and more comfortable motor insurance experience and will be an answer to the Thai digital lifestyle," he added. The company has reportedly invested 100 million baht ($3.3 million) in the technology.

The device will be configured to work as soon as users plug it into the USB port in their car.

Thaivivat has already been selling the pay-as-you-drive insurance product, but it had to be turned on and off manually in the insurer's mobile application.

Thailand's roads are ranked the deadliest among the members of the  Association of Southeast Asian Nations and are considered some of the most dangerous in the world.

According to a 2018 report by the World Health Organization, 32.7 out of 100,000 deaths in Thailand were caused by road traffic accidents. The road safety of Southeast Asia's second-largest economy, with a population of around 67 million, ranks the seventh worst in the world, after Liberia, Saint Lucia, Burundi, Zimbabwe, the Democratic Republic of Congo, Venezuela and the Central African Republic. It estimated that an average of 22,491 people are killed on its roads every year.

According to data from the Thai General Insurance Association, the country's motor insurance market has doubled in size over the past decade as more motorists hit the road. In 2017, total direct premiums reached 126 billion baht, from 61 billion baht in 2007.

However, Thai people tend to prioritize buying life insurance over nonlife cover such as auto insurance. According to Zurich-based reassurance company Swiss Re, Thailand's insurance penetration ranks 25th in the world. In terms of nonlife insurance premium volume, it falls to 33rd place.

Reportedly, some 30% of motorists are unwilling to apply for auto insurance as they consider it unaffordable. Providing reasonable products has become a social priority and is offering opportunities for insurance companies.

Ayudhya Capital Auto Lease, known as Krungsri Auto under the country's fifth-largest lender Bank of Ayudhya, has started tapping the market, offering affordable insurance products in a different way from Thaivivat.

In June, Krungsri Auto launched an online insurance distribution channel that allows customers to compare and find products that match their needs and budget. By entering vehicle specifications, annual budget, insurance class and coverage details, the system will show comparisons of matched products. It will also highlight recommended conditions to help users in their decision-making.

"Digital platforms are becoming increasingly a vital part of today's shopping experiences," said Krungsri Auto Chairman Pairote Cheunkrut, citing a Bain & Company survey that found approximately 60 percent of Thai nonlife insurance customers use mobile devices for product research.

The company is aiming for 300,000 visitors a month to the channel and expects to gain 200 million baht-worth of motor insurance premiums through the channel in the first year.

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