From parametric insurance protecting rice farmers from sliding into poverty, to tailored packages aimed at young, urban, high-earning professionals, Thailand’s contrasted segment needs offer a wide range of possibilities and growth opportunities for AXA’s two local entities. Here’s a look at who the Thai customer is.
From dry rice paddies…
I met her at the village Bank for Agriculture and Agricultural Co-operatives (BAAC) – a government bank that since last year started proposing insurance to 2.6 million rice farmers that would prevent them from getting financially submerged like the rice paddies after another particularly intense rainy season. I was referred to her through a contact at AXA Thailand, one of the four principle insurers in this government scheme.
She had agreed to be interviewed and I really wanted to conduct the interview on her land rather than in the air-conditioned but bustling branch of the bank. It was a short drive and on the way we saw dry paddies and empty reservoirs. One was a third full. “That’s a private reservoir” I was informed. “They’re holding on to the water to sell it, once the government reservoirs are empty.” This was the case, despite such heavy rains last season that Sanoe was up to her waist in water in her fields, watching her whole harvest destroyed.
She and her neighbours have been on the sharp end of climate change and their situation is fragile. “The rains are too short and too intense. And in between it gets so dry the rats have free rein in the rice fields. We have to burn them out, and the crops with them.”
Between the rain, the dry spells and the rat-infestation, she has no choice but to buy new seeds, at great cost to her. Had she not been insured she would not have been able to continue with the lifestyle she had always known. Other options do exist: borrowing off loan sharks or banks that are less flexible on reimbursing than the public BAAC. Or packing up and moving two-hours’ drive away to work on a building site. Some, drowning in debt and shame have taken a more final solution: suicide.
As the sweat trickled down my back on the dirt track among her fields, I asked her if she knew of anyone who had resorted to that. She nodded vigorously and pointed in various directions, across her fields, hazy in the midday heat: locations of neighbours who had opted out of life.
Sanoe is still struggling, yet her situation is less precarious than that of her forbearers, as she is insured and the government scheme covers fire, flood, drought, coldness, windstorm, hail and plant pest. AXA Thailand’s participation in this Scheme represents another major step towards protecting emerging customers in Thailand through parametric insurance and being a partner with the local communities and improving the living standard of Thais.
So Sanoe has more than a glimmer of hope that she can aspire to a better tomorrow. She is on the cusp of the emerging market.
So who, or what is, an emerging customer? According to Monnida Musicabud, Head of Corporate Strategy & Development at AXA Thailand, a broad definition is a low income customer who has the potential to become middle class in the future. This includes people earning somewhere between four and thirteen US dollars a day. A large swathe of Thailand’s population fall into this range as the country steadily and surely strengthens its economic situation, hoisting itself to the position of second economy in the region.
Many of the these emerging customers are women: new entrants into the market as urbanization and societal changes have given them greater opportunities to accede to careers, but also greater individual responsibility to care for themselves and their children, particularly in the instance of divorce. The emerging market is very much driven, not just in Thailand but in all parts of the world, by this new female segment. It’s fast growing, full of potential, and has many faces. One of these is Kannitha.
….to urban watering holes
Change of scenery: a trendy coffee shop located at the foot of gleaming, modern Phayathai hospital in the Thanon Phaya Thai district of Bangkok. I’m slurping on a refreshing iced tea, courtesy of Ms. Kannitha Pradonchob, known to her friends as Ni. She’s the owner and manager of Wawee Coffees, on top of her job as marketing executive for a private company and overseeing her new venture, an outlet in a food court. This professional multiplicity and economic savvy has enabled her to help her husband with his accounts. Her primary concern, however, is her son’s health. Ken is a lively, smiling three year-old, and like many kids his age, tied to in his mother’s apron strings.
Following a discussion with a female friend just after her son’s birth, she acquired a health insurance for him from Krungthai-AXA. “As a business woman, I have so little time, so I needed something that would take care of things. I consulted a salesperson who gave me excellent advice and I got the iChild Health product. I needed to be reassured and this really fit my lifestyle and family situation.”
A little later, whilst still a baby, Ken had health issues and had to be admitted to hospital. A worry to this busy women’s life that overshadowed all else. “I was able to get the very best doctors for my son and I don’t need to worry about hospital costs. I feel totally safe now”, she told me. She since got her husband health insurance, then herself, before getting a life insurance product for them both.
Ni’s example is not just representative of the new power that women in Thailand represent, as they take on a role of greater importance in their family, in society and in the economy. It’s also a key opportunity for capitalizing on a huge market segment that will grow as the emerging client segment grows in size and in wealth.
Siamese sisters: Engines of the Emerging Economy
Thai women represent 51% of the overall population, 46% of the working population and, compared to women in other focus countries, are more likely to make financial decisions independently of their spouses. They spend about 3% of their income on insurance; however, market research shows that women who are already aware of the benefits of insurance, particularly of life and health, are willing to spend 10-15% of their income on insurance.
And yet women only represent 44% of AXA Thailand’s current customer population.
Enter Happy Lady: a comprehensive insurance specifically targeting upwardly mobile Thai women with premium products designed around an active lifestyle. The profile is urban professionals, single or in a couple, but socially active and active consumers. And what sets them apart from their male counterparts: they are more watchful of their health and wellness.
The Happy Lady line is comprised of three products: Happy Drive, Happy Living & Happy Care, covering Motor, Property and Health, each with specific protection features adapted to the female target. Happy Drive for example has additional theft of property inside the vehicle, as women are more likely to get a more visible handbag stolen than a wallet, and 24-hour roadside service for emergencies nationwide. With the Happy Living offer, in addition to flood, earthquake, storm coverage, the insurance can be acquired immediately without property inspection. And Happy Care, aimed at career women, offers coverage aimed at common illnesses for office workers, as well as cancer screening.
Since the launch of Happy Lady, AXA Thailand has seen a 4% increase in its female customer vs 2015.
A land of contrast with a common characteristic
Thailand is a country of contrasts. Like many emerging countries it has moved away from its predominantly agricultural past and its economy depends now more on tourism and industry. At the same time it is the second largest rice exporter in the world and the second largest economy in the region. It is very traditional yet embraces modernity and open-mindedness. Politically it has seen its share of instability, yet the population remains confident, looking towards the future with the ubiquitous smile, ingrained in Thai social mores. One certainty: from the entry point of this emerging market, with the likes of rice farmer Sanoe, to the more established or upwardly mobile middle class Happy Ladies, it’s obvious that the key to penetrating this segment is women.