The Middle East war has dampened prospects for Thai insurance premium growth this year as energy prices skyrocket along with reinsurance expenses and financial market volatility, warns the regulator.
Chuchatr Pramoolpol, secretary-general of the Office of the Insurance Commission (OIC), said the conflict poses a significant risk to the global economy through rising oil prices, supply chain disruptions, inflationary pressures, and volatility across global financial and capital markets.
The impact could spill over to Thailand's insurance sector through slower premium growth, higher claims costs, and rising reinsurance expenses as global reinsurers adopt stricter underwriting standards.
"The conflict in the Middle East could increase operating costs, repair expenses, medical costs and insurance claims, while global reinsurance markets are becoming more selective in accepting risks," Mr Chuchatr said.
SLOWER PREMIUM GROWTH
The OIC expects insurance premium growth to miss earlier forecasts due to weaker economic activity, soft consumer spending and volatile financial markets.
Non-life insurers are likely to face rising claims costs linked to higher energy prices, construction materials, labour and transport expenses. Health insurers may also experience pressure from medical inflation and higher pharmaceutical costs.
Industries exposed to global trade and geopolitical risks, including marine, aviation, logistics, energy, property, and business interruption insurance, could face tighter underwriting conditions and more expensive reinsurance coverage.
Despite these challenges, health insurance is still expected to expand steadily, supported by stronger consumer awareness of healthcare protection, noted Mr Chuchatr.
The OIC said it will monitor developments in the Middle East and other global economic risks, particularly their impact on energy prices, inflation, capital markets, and the global reinsurance industry.
HANDLING VOLATILITY
He said the regulator conducted internal stress tests and liquidity assessments since March to evaluate the impact of worsening geopolitical conditions on insurers' balance sheets and solvency positions.
The scenarios included rising bond yields, falling equity prices, inflationary pressures from higher oil prices, elevated claims costs, and tighter conditions in global reinsurance markets.
Liquidity tests conducted across short, medium and long-term horizons indicated most insurers have adequate liquidity to manage obligations and cash flow during periods of market stress.
The results showed most insurers continue to maintain sufficient capital buffers above supervisory requirements, even under adverse conditions, said Mr Chuchatr.
As of the fourth quarter of 2025, life insurers reported a capital adequacy ratio (CAR) of 442%, while non-life insurers recorded a CAR of 367%, greatly exceeding the regulator's minimum requirement of 140%.
These figures indicate Thailand's insurance industry remains financially strong and capable of absorbing external shocks, he noted.
"The strong capital position of Thai insurers should allow them to withstand global economic volatility," said Mr Chuchatr.
Thailand's insurance system remains stable and well-capitalised, he said, adding the regulator will continue supervision and stress testing to preserve confidence and stability in the industry amid rising global uncertainty.
