The government will bear some of the burden for the payment of claims from Covid-19 policyholders, says Deputy Finance Minister Julapun Amornvivat.
He said total payouts from Covid-19 insurance lump-sum claims rose to almost 60 billion baht, excluding claims from Syn Mun Kong (SMK) Insurance.
As a result, many non-life insurance companies have had their licences revoked and been forced to close because they did not have sufficient premiums and capital reserves to pay for the claims.
Mr Julapun said the General Insurance Fund (GIF) under the Office of the Insurance Commission (OIC) does not have sufficient funds to pay for the claims.
Insurance companies contribute 600-700 million baht per year to the fund, amounting to 0.50% of their annual insurance premiums, while the government also makes a yearly contribution (3 billion baht is allocated for 2024).
The amount remains insufficient to pay the claims over a short period, he said.
“The government may have to partly bear this burden through the fiscal budget,” Mr Julapun said.
Regarding SMK, the business rehabilitation plan has not been approved by shareholders and the OIC took control of claims payments, ordering it to stop accepting new policies.
SMK has more liabilities than assets, amounting to 30 billion baht, with 500,000 outstanding claims totalling 32 billion baht. Of this amount, 350,000 are Covid-19 policyholders whose claims reached 30 billion baht.
The company’s active insurance policies total 1.87 million.
While the government could immediately inject 50 billion baht into the fund, it does not mean the claims would be settled quickly because the verification process takes a lot of time, he said.
To promote effective supervision of the insurance industry, the government will review related legislation to close loopholes and protect consumers, said Mr Julapun.
The Finance Ministry revoked the business licences of four insurance companies — Asia Insurance, The One Insurance, Southeast Insurance and Thai Insurance — last year after they were declared financially incapable of paying out outstanding claims, amounting to 65 billion baht from a total of 700,000 claimants.
Insurance companies are required to contribute 0.50% of their annual premiums to the GIF, up from 0.25%. The GIF has revenue of 6 billion baht as of this month.