A huge number of Covid-19 insurance lump-sum claims, spurred by the peak of the pandemic in 2021 and early this year, caused the closure of four insurance companies -- Asia Insurance, The One Insurance, Southeast Insurance and Thai Insurance -- as they did not have sufficient capital reserves to pay out on the claims.
At the same time, Syn Mun Kong Insurance (SMK) is planning to raise capital and find new partners to stay afloat as it navigates a court-supervised rehabilitation.
Southeast Insurance and Thai Insurance filed an application to the Office of Insurance Commission (OIC) to dissolve their businesses on Jan 31, offering a full refund to Covid policy holders with 1.8 million policies in total. Around 880,000 customers have requested a refund, with more than 1 million policies still to be taken care of.
Both insurers were part of the non-life insurance business of Thai Group Holdings Public Co (TGH) insurance and financial group in the TCC Group of billionaire Charoen Sirivadhanabhakdi.
Both companies' liquidation came about due to the impact of Covid-19 insurance claims. As of 2021, both companies sold 1.8 million Covid policies with total claims of 10.9 billion baht, with some 10 billion baht supported by major shareholders to pay out on the claims, according to the OIC, while daily infections continued to rise further early this year.
As well as the financial support from the TCC Group, other alternatives, such as securing loans from financial institutions or by raising capital, could not be carried out amid the substantial increase in daily infections. The final option at that point was closing the businesses.
The two companies had outstanding claims for Covid insurance claims of 18.1 billion baht, of which 13.4 billion belonged to Southeast Insurance with the remaining 4.6 billion belonging to Thai Insurance. Southeast Insurance's assets totalled 16.9 billion baht, while its liabilities amounted to 18.1 billion. Thai Insurance's assets stood at 2.5 billion baht, while its liabilities stood at 15 billion.
OIC secretary-general Suthiphon Thawichaikan announced on April 1 that the Minister of Finance issued an order to revoke the licences for the insurance businesses of Southeast Insurance Plc and Thai Insurance Plc with immediate effect.
While Covid-19 policies were cancelled, other (non-Covid) insurance policies such as auto, accident, health and property insurance policies, amounting to 8.6 million policies in total, were transferred to other insurance firms as Southeast Insurance and Thai Insurance filed to dissolve their businesses.
As a liquidator, the non-life Insurance Fund has been cooperating with other non-life insurance companies and life insurance companies to take on the policy holders affected by the closure of the two companies.
Covid-19 lump-sum insurance has no longer been available since the middle of this year, while the insurance business has started to improve and stabilise. According to the OIC, non-life insurance premiums are expected to grow by up to 2.5% with estimated premiums of 271 million baht, while life insurance premiums are set to increase by 2.25% to 4.25%, compared with growth of 3.5% to 4.50% according to a forecast made by the Thai General Insurance Association.
