Insurance law intends to provide more cover
A Commerce Ministry committee has proposed the setting up of an insurance fund to increase liquidity for insurers in order to protect the interests of policy holders in the event of an insurer being forced to shut down because of insufficient reserves.
The committee to amend the life and non-life insurance law expects the draft of such a law to be completed in the middle of December and submitted to the Cabinet and the National Legislative Assembly (NLA) early next year. NLA second deputy speaker Potjanee Thanavaranit, who chairs the life and non-life insurance law amending committee, said after a meeting with the Thai General Insurance Association (GIA), Thai Life Assurance Association (TLAA) and Insurance Actuary Association of Thailand (IAAT) that the participants had concluded a framework to amend the law. A decision was made to set up an Insurance Fund, different from the existing Insurance Development Fund. The new fund aims to take care of life and non-life insurers, which tend to have high risk-management and financial problems. The fund is aimed at protecting policy holders in case the insurers are forced to close down. Last year, Commercial Insurance was ordered to shut down by the Commerce Ministry after the cash-strapped insurer's new rehabilitation plan was rejected by the Insurance Department. Consequently, thousands of policy holders were forced to find new insurers and claims were left unresolved. In May 1997, Rattanakosin Insurance was ordered to stop operating by the department after it ran into similar problems. "The fund will raise liquidity through members of the Thai GIA and TLAA. Any insurer who has a high risk of financial instability will be required to make a higher contribution. Those who face lower risks will be asked to contribute a smaller amount," said Potjanee. Potjanee said all parties had agreed to this idea, but the rate of charges will be discussed later after the draft of this law is approved. The resolution encourages all insurers to become public companies for the sake of good governance. The endorsement also encouraged actuaries to play a more important role in life and non-life insurance assessment. Chantra Purnarisksha, director-general of Insurance Department, expects a law to be submitted to the Cabinet early next year to allow it to become independent.
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