The Commerce Ministry yesterday appointed a board member to save cash-strapped Saha Life Insurance after it failed to maintain its regulatory reserve.

Deputy permanent secretary Yangyong Phuangrach will chair Saha's board of directors, which includes Insurance Department director-general Chantra Purnariksha.

The department has fined Saha, owned by thousands of cooperatives nationwide, six times since September 1, 2005, because its reserve fell below the level required by the department.

The insurer was first fined Bt125,000. Following its non-compliance, the department has fined Saha Bt1,000 a day from September 22, 2005.

Originally, regulations allowed each cooperative to hold not more than 0.1 per cent of Saha's registered capital, or not more than Bt200,000. With so many shareholders, management has had difficulties practising good governance. Each cooperative asks for lower premium rates, signs up ageing people for policies and seeks

the privilege of waiving medical check-ups before submitting application forms.

Saha has Bt208 million in registered capital but carries Bt260 million in retained losses and a shortfall of Bt30 million in its required reserve.

The new board will run the insurer while seeking a new partner.

The department also affirmed that by tomorrow, it would shut down Thanasin Insurance if it failed to submit a satisfactory rehabilitation plan.

The department has fined Thanasin dating back to September 27, 2005, because its reserve did not meet the department's requirement.

It was fined Bt125,000 on that day, plus Bt1,000 a day from October 21, 2005. This past January, it was fined Bt1.35 million for tardiness in paying claims. The department early this month instructed Thanasin to submit a rehab plan and settle all pending claims amounting to over Bt400 million.

In July 2005, then-commerce minister Thanong Bidaya ordered Commercial Insurance to shut down after it failed to submit a revamp plan as ordered by the Insurance Department.

Although Commercial Insurance has been defunct for almost two years, its executives have never been charged. In late 1999, Rattanakosin Insurance faced similar problems and was wound down.