The Office of Insurance Commission (OIC) announced it will continue to prohibit the cancellation of Covid insurance policies with a lump sum payment to protect policyholders but will allow insurers to offer voluntary changes of insurance to customers.
OIC secretary-general Suthiphon Thaveechaiyagarn said the commission and the Thai General Insurance Association (TGIA) met on Nov 15 to discuss insurance companies' liquidity issues caused by a surge in Covid insurance claims.
The TGIA disclosed that about 30 billion baht of Covid insurance claims have been paid so far and the accumulated value is likely to rise until the insurance policies expire at the end of June next year.
After the discussion, the OIC and TGIA agreed to allow insurance companies to offer new types of Covid insurance to policyholders to replace the existing ones with a lump sum payment to prevent more losses. However, they strictly need consent from policyholders before changing policies.
"If the customers are forced, they can file a complaint to the OIC," said Mr Suthiphon.
He said the OIC confirmed to the TGIA that it will not revoke its order to prohibit insurance firms from cancelling their Covid insurance with a lump-sum payment because the cancellation will hurt customers' confidence in the insurance industry as a whole.
Customers of One Insurance who recently received text messages and letters to cancel and change the conditions of the policies on Nov 12 can rest assured the insurer cannot arbitrarily change the insurance policies and their rights are fully protected, he said.
Mr Suthiphon said insurance firms have confirmed to the OIC that they are trying to find ways to manage their liquidity problems without affecting policyholders.
They promised they will strictly comply with the registrar's order and not force customers to change their policies without consent, he said.
To contain the situation, the OIC has also urged non-life insurance firms that are offering Covid coverage to provide additional information from their stress tests to assess the durability of each company and the insurance ecosystem as a whole.
Any insurer with a liquidity problem is also invited to join the waiver programme in order to enhance their liquidity.
Currently, the OIC has 5 billion baht in subsidy funds to help the insurers. The funds can also be increased if necessary.
Anon Vangvasu, president of the TGIA, said the accumulated value of claims from Covid insurance may reach 40 billion baht next year.
He said the pandemic situation in Thailand has improved and now seems manageable but he is not certain whether Thai insurance firms will be able to handle the probable tide of claims next year.
According to the TGIA, insurance companies have issued a total of 39.86 million Covid insurance policies with a lump-sum payment valued at 11.25 billion baht from March 2020 to Aug 31, 2021.
The insurers stopped selling the product after August to avoid losses as the pandemic situation continued to escalate, resulting in a spike in Covid insurance claims. Surges of claims after the third wave caused decreases in earnings which consequently lead to a liquidity crunch.
