BUSINESS: The Finance Ministry has revoked the business licences of Southeast Insurance and Thai Insurance, effective as of yesterday (Apr 1), after the two companies were declared financially incapable of paying outstanding claims, according to the Office of the Insurance Commission (OIC).
Policyholders who have not received compensation from their insurers gather at the Office of the Insurance Commission to file complaints in mid-March. Photo: Nutthawat Wicheanbut
After the closure, the OIC and the General Insurance Fund will be responsible for compensation payments of outstanding claims for the two companies, said Suttipol Taweechaikarn, secretary-general of the OIC.
He said that after the regulator ordered both companies to temporarily suspend issuing new policies and had a discussion with a shareholders’ representative and related groups, it was informed that the shareholders would not provide any additional financial support to the two companies, reports the Bangkok Post.
The two companies were operating under the umbrella of Thai Group Holdings (TGH), part of the diversified business empire of billionaire Charoen Sirivadhanabhakdi, the country’s third-richest person with a net worth of US$12.7 billion (B426bn), according to Forbes magazine.
Without any additional capital injection, the companies would be unable to pay compensation on time and record claim payments as required by law. This means they are subject to licence revocation to protect the benefits of policyholders, said Mr Suttipol.
After revocation, only holders of COVID insurance policies with lump-sum payments will be affected because policyholders of other insurance products have already been transferred to other insurers.
In this regard, the OIC has set up advisory centres to receive complaints and facilitate debt repayment requests.
The OIC will provide support personnel to help receive debt repayment applications both at OIC headquarters and other provincial OIC offices, said Mr Suttipol.
He said customers of both companies can bring documentary evidence to the commission and file for a claim. After receiving a request, the OIC will pay for claims using reserves from the General Insurance Fund, according to the regulator.
The OIC said the closure of the two insurers will have a limited effect on the industry as a whole, and confirmed that the sector remains financially stable. In addition, the OIC has asked the Economic Crime Suppression Division to audit the financial activities of all executives related to the two companies, Mr Suttipol said.
In 2021, two non-life insurers – Asia Insurance and The One Insurance – were forced to close because of liquidity trouble induced by losses from Covid claims, which spiked during the third wave of the pandemic.
Southeast Insurance and its sister company, Thai Insurance, subsequently faced liquidity problems and filed a request to cancel all of their remaining COVID policies offering lump-sum payments.
The OIC rejected the request, stating arbitrary cancellation of policies is against the law and the companies must comply with the conditions stated in the policies they offered to the public.
Protests against the two companies whose licenses were revoked yesterday were witnessed in Phuket on Mar 28 when 30 people gathered at Phuket Provincial Hall to demand action be taken over the companies refusing to pay out COVID-19 coverage claims. In total, 831 people in Phuket have been affected by the defaulted payouts, amounting to B98 million.
-Additional reporting by The Phuket News