Most insurance companies are not in as poor financial health as Chao Phaya Insurance Plc, as they maintain an average capital adequacy ratio (CAR) of 220-230%, higher than the required threshold of 140%, says the Office of the Insurance Commission (OIC).
Normally, the OIC requires insurance companies to have a CAR ratio of 140% and the trigger point is 100%, said OIC secretary-general Suthiphon Thaveechaiyagarn.
Chao Phaya's CAR ratio at the termination date was lower than 100%, prompting the OIC to take action, Mr Suthiphon said.
The company has three months to correct factors causing a decline in the CAR ratio, including improving internal control and internal risk management, seeking an external accounting auditor and increasing capital, he said.
"The CAR ratio is not the only reason the OIC ordered Chao Phaya to temporarily terminate insurance sales," Mr Suthiphon said.
Chao Phaya's deteriorating financial health is a stand-alone case, as 83 non-life insurance companies maintain their CAR ratio at 220-230%, he said.
The OIC's order was issued on March 23 and took immediate effect.
The company's financial status appears insecure; funding is under the legal requirement and debts also exceed assets, Mr Suthiphon said.
Moreover, the company's financial reports and statements were also found inaccurate, with suspicious items suggesting attempts to conceal its true financial status and operations, he said.
Mr Suthiphon said financial regulators can bring regulation technology (regtech) and supervision technology (suptech) to help businesses comply with regulators' rules in the future.
Technology also helps regulators increase monitoring of business operators, he said.
Insurance businesses are eager to bring technology to service their customers and launched a range of new insurance products in 2017, Mr Suthiphon said.
"The next questions are how the regulator will regulate the business and new technology and how businesses will comply with rules and technological development," he said. "We will hear the words 'regtech' and 'suptech' more."
The regtech can help companies manage risks and fulfil regulatory compliance more effectively, at a lower cost, he said.
Examples of regtech include databases on customer due diligence and Know Your Customer, which prevent money laundering and fraud.
Separately, the Securities and Exchange Commission has announced that it will impose fines on News Network Corporation Plc (NEWS) and its chief executive, Arak Ratborihan, for an offering of newly issued shares for a private placement without obtaining prior approval from the SEC.
According to an SEC probe after complaints from minority shareholders and the Association of Thai Shareholders, NEWS issued 6 billion capital shares for a private placement and did not file an application for a private placement with the SEC as required.
