Thailand’s Finance Minister Arkhom Termpittayapaisith has revoked the business licenses of two financially-troubled Thai insurance companies, Southeast Insurance and Thai Insurance, effective today (Friday), following a massive amount of COVID-19 claims.

Secretary-General of the Office of the Insurance Commission (OIC) Suttipol Taweechaikarn said that the finance minister had no choice but to close the businesses, because their shareholders have refused to increase the capital.

He said that the two insurance companies now have more liabilities than assets, due to claims for compensation from many customers who took out the two firms’ “Found, Paid, Done” COVID-19 insurance policies.

The compensation claims mounted as COVID-19 spread, to the extent that their liabilities have outstripped their assets

The OIC secretary-general said that the insurance reserves and capital funding ratio of the two firms are below what is required by law, the companies have unreasonably delayed compensation payments to their customers and they have failed to record compensation payments as required, forcing the OIC to propose the revocation of their licenses.

In January, Thai Group Holdings, the parent company of Southeast Insurance, notified the Stock Exchange of Thailand of its board’s decision to wind the insurance company up and to return its operating license to the insurance registrar. The move was, however, rejected by the OIC on the grounds that it cannot simply shut down the business unilaterally without approval from the OIC.

Suttipol said that the OIC has been trying hard to solve the financial problems of the two companies for the benefit of their customers, but without success.

He admitted that the revocation of the licenses will affect only the COVID-19 policy holders, whereas other life and non-life insurance policies have been transferred to other providers.

Southeast Insurance still owes 13 billion baht in compensation, whereas Thai Insurance owes 4.6 billion baht.