Regulator says insurer suffering massive loss over COVID claims cannot close down yet
Thailand’s Office of Insurance Commission (OIC) said that the financially-troubled Southeast Insurance Company cannot just shut down, as it has to receive a permission from the OIC first, amid concern among millions of the company’s clients.
On Wednesday, Thai Group Holdings, the parent company of Southeast Insurance, notified the Stock Exchange of Thailand of the board’s decision to close the insurance company and to return its operating license to the insurance registrar, after it sustained heavy losses from claims by customers who have taken out insurance coverage for COVID-19 infections.
Citing Section 57 of the Non-Life Insurance Act B.E, 2535 (1992), the OIC said in a letter of clarification yesterday that that an insurance company which wants to cease operations must seek permission from the Insurance Commission, in order to protect the interests of the insured, the beneficiaries of the insurance policies and other stakeholders.
Before granting the permission, the OIC said that the Insurance Commission is authorised to set conditions with which the troubled insurance company must comply within a set timeframe.
It detailed some of those terms:
- The company must notify the insured or beneficiaries of the insurance policies about the planned closure, so they can exercise their legal rights.
- Financial reserves to meet outstanding claims must be transferred and lodged with insurance registrar.
- How the company will manage its legal obligations under the insurance policies must be defined.
- Management must be arranged for the company’s assets and liabilities related to the insurance business and investments in other businesses of the company.
- The duration of the implementation of the above mentioned conditions.
Dissolution of an insurance company will take effect on the day that the Insurance Commission grants the permission.
As far as the Southeast Insurance Company is concerned, the OIC said that the company is not yet legally dissolved.
The OIC also urged members of the public not to panic, assuring that Southeast Insurance remains legally operational, adding that regulatory officials are closely monitoring the situation, to protect the interests of the insured, the beneficiaries as well as other stakeholders.