The Insurance Department has stopped small general insurer Thanasin Insurance from selling policies after it failed to raise capital to solve a liquidity crisis.

The department is looking at two other non-life companies with liquidity problems after failing to maintain 10 per cent of total premiums in insurance funds, it said.

Department director-general Chantra Purnariksha said yesterday there was no cause for concern among Thailand's 68 general insurers and 24 life companies.

Companies with liquidity shortages account for just 4 per cent of all companies, she said, adding the department had the matter under control.

The Insurance Act requires non-life insurers to maintain 10 per cent of premiums - or a minimum of Bt30 million - in insurance funds.

Life companies must keep 2 per cent - but no less then Bt50 million - in the funds.

More than 400 Thanasin policy-holders have complained of delays in the settlement of claims since last year.

Problem claims total more than Bt40 million.  "The department has had to suspend the company from selling policies in order to protect people," Chantra said. But the company's licence had not been revoked.

Thanasin must pay claims and submit a financial-restructuring plan by the end of the month.

Chantra said the department was auditing the company. Thanasin must meet restructuring requirements before the department can consider allowing it to resume selling policies.

Thanasin had outstanding policies worth Bt555 million in 2005, according to the department.

Total assets were Bt234 million. Claims totalled Bt550 million and other liabilities were Bt88 million.

Thanasin needed to increase capital by Bt405 million to meet requirements.

Automotive repairs union representative Naranart Ratanasak-viboon worried the insurer's liquidity crisis would cause garages financial harm.

Thanasin owed mechanics and bodywork professionals around the country between Bt300 million and Bt400, according to Naranart.

Naranart demanded that the department force Thanasin to pay claims owed before firms go bankrupt.

Petchanet Pratruangkrai

The Nation