Thai Covid policyholders offered deal by regulator

The General Insurance Fund (GIF) of Thailand is reportedly presenting policyholders who have Covid-19-related loss claims with a choice of either taking a discounted offer right now or potentially waiting a decade for an uncertain payment level.

The GIF was established as a government unit back in 2008 and is designed to protect policyholders when insurers fail. It is managed by the Thai insurance supervisor OIC.

During 2020-2022, a number of Thai insurers were heavily affected by Covid-19-related claims, particularly those who provided cover against infection but did not hold overseas reinsurance cover.

Unlike most other countries, a number of Thai insurers took a gamble on Covid-19 by issuing specific policies to cover against infection when it hit, for what now looks like a very low price.

The OIC explained back in 2021 as the pandemic raged worldwide that Thai customers could buy 200,000 to two million baht of coverage for only 450 to 1,200 baht a year.

“Now insurance companies find themselves not only covering claims by people legitimately suffering from the virus, but also from economically desperate people who purposely got infected to collect insurance money,” stated the OIC as the folly of the strategy taken by a number of Thai insurers became clear.

“The OIC usually urges insurance companies to consider their risk acceptance capacity before issuing claims, and it warned insurance company that it cannot arbitrarily terminate Covid-19 insurance contracts with lump-sum payments, threatening legal action or fines if the insurer moves forward with its plan,” said the OIC as insurers attempted to dodge the claims back in 2021.

Ultimately, the unexpectedly high level of claims under the policies led to the insolvency of at least four insurers and the loss of 14 licenses.

The Bangkok Post reported in late April that Thailand’s Finance Ministry now plans to tap into private companies via the GIF to help expedite the payment of outstanding claims held by the four dissolved non-life insurance companies.

The newspaper quoted the permanent finance secretary Krisada Chinavicharana as saying that the move to outsource part of the claim payments will speed up the process to 10,000 policyholders per month, up from the current rate of 300 per month.

Krisada reportedly said that due to a staff shortage at the GIF, only 5,000 policyholders out of tens of thousands of claimants have so far been paid.

The report also quoted Krisada as saying that the GIF had sufficient funds to pay out the claims, tallying THB7bn in cash.

He noted, however, that the GIF may need to issue bonds or seek bank loans to increase its liquidity to pay the Covid claims, according to the report.

Krisada was also quoted by the Bangkok Post as saying that the OIC may also look into injecting its own funds into the GIF.

The permanent finance secretary allegedly said that the total amount of outstanding Covid-19 claims is approximately tens of billions of baht.

The Bangkok Post also quoted an anonymous ministry source who said that it may take the GIF 60 years to repay the loans to banks if it needs to seek additional funds to pay out the Covid-19 claims.