More insurance firms face bankruptcy if COVID-19 insurance claims are not scrapped

[candide]

2 hours ago, Adumbration said:

Can anyone post a link to the companies that may go bankrupt.  I am about to renew my yearly car insurance with AXA but happy to jump ship if they are at risk of going bust when omicron explodes next february.

AXA is a large international (French) company so I guess they have effective risk assessment and management procedures.

[Sheryl]

13 minutes ago, robblok said:

Yes a lot of people don't seem to understand that these policies were a big win for those who got covid. The payout exceeded their cost (in general). We are not talking about policies that just cover the real healthcare costs.

Indeed they were, but can hardly blame the policy holders, this was a huge mistake on the part of the insurers. In addition they seem to have been very slow to react when the problem became evident. They could have trerminated policies much earlier (usually possible to do on written notice to the policy holder, but termination is of course not retro-active) and should have done so well before payouts do exceeded the company's assets.

 

The government cannot allow these companies to refuse to pay out to existing policy holders who have contacted COVID already, that would be a major breach of contract and of trust in the insurance industry. I personally do not see any viable solution other than a bail out but hopefully structured so as not to reward incompetance. There should be some way of winnowing out these inept insurers will still protecting consumers from unpaid claims.

[robblok]

1 minute ago, Sheryl said:

Indeed they were, but can hardly blame the policy holders, this was a huge mistake on the part of the insurers. In addition they seem to have been very slow to react when the problem became evident. They could have trerminated policies much earlier (usually possible to do on written notice to the policy holder, but termination is of course not retro-active) and should have done so well before payouts do exceeded the company's assets.

 

The government cannot allow these companies to refuse to pay out to existing policy holders who have contacted COVID already, that would be a major breach of contract and of trust in the insurance industry. I personally do not see any viable solution other than a bail out but hopefully structured so as not to reward incompetance. There should be some way of winnowing out these inept insurers will still protecting consumers from unpaid claims.

I agree can't refuse to payout people. I think they should terminate policies and pay people back what they on the policy (though i find it a breach of trust already) but it beats the alternative. But they should not be allowed to deduct anything. It should be the full amount or nothing. I mean they are the ones that don't want to take the risk anymore let them pay for it.

 

The thing is with bailouts and stuff like that companies still get of better then when going bust. For them its an advantage to be bailed out and will pass cost to the taxpayers. Maybe it should be like a loan they have to pay back. 

 

Did they stop selling these policies (i assume they did but you never know). Anyway, i feel that incompetence should never be rewarded, and consumers should not suffer. 

 

I always feel that those companies try to wiggle out and still preserve some profits (not take a hit as big as they could). It should really be the bare minimum to make sure policy holders get paid out and not so generous that the company will recover easy.

[Adumbration]

7 minutes ago, Sheryl said:

The government cannot allow these companies to refuse to pay out to existing policy holders 

These companies ARE the government or at least their cronies and family.

[Don Chance]

Emirates just dropped their free multi-risk insurance. That was a sweet deal, mine is still valid until end of Feb, then i will have to switch to regular travel insurance, about $100 a month. I've had about $500 in claims and the ticket was only $900. lol.

 

https://www.emirates.com/th/english/before-you-fly/multi-risk-travel-insurance/

[robblok]

27 minutes ago, Adumbration said:

These companies ARE the government or at least their cronies and family.

If what you say is true, how does it make sense that the government did not allow them to cancel policies?

 

If they were so closely connected im sure that their pleas for help would already been awnsered. 

 

Can you explain this to me ? 

[Etaoin Shrdlu]

30 minutes ago, candide said:

AXA is a large international (French) company so I guess they have effective risk assessment and management procedures.

I don't think there is much to worry about with AXA Thailand. I don't think AXA offered the personal accident policies that are at the heart of this problem and I suspect AXA Thailand has done proper risk assessment and made reinsurance arrangements as necessary for its risks. Local AXA management is probably sound and under the eye of the parent.

 

But a discussion of international insurers' operations in Thailand is worthwhile.  Most international insurers have locally incorporated subsidiaries or joint ventures in Thailand. This means that a policyholder would only have recourse against the balance sheet of the local subsidiary. If the local subsidiary went bust, the parent company would have no obligation to step in and make good on locally issued policies. Some international insurers, when asked about the security rating of their local operations, attempt to confuse the issue by citing the Standard & Poors rating of the parent company, which has little bearing on the claims-paying ability of the subsidiary. International insurers won't provide any kind of parental guarantee or cut-through clauses in their policies. This tells me they would be prepared to walk away from a steaming hole in the ground if they were presented with a big enough one. But in spite of this, a policyholder is probably better off holding a policy issued by the local operation of an international insurer than having a policy issued by some of the Thai insurers.

[Jimjim1]

9 hours ago, RandiRona said:

There is none, Monkey does all their calculations using Abacus.

Don’t blame the abacus, that was the single thing that shaped the world of trade until the calculator and computer came along.

The abacus does not lie only the user can do that but computers are a different animal.

A computer spreadsheet can tell you anything you want it to, and now that it has come full circle they don’t like it up ‘em sir, they don’t like it up ‘em.

[Sheryl]

1 hour ago, candide said:

AXA is a large international (French) company so I guess they have effective risk assessment and management procedures.

AXA Thailand is a Thai company not French. It is indeed large though and it is not one of these. These are mostly very small companies

[scubascuba3]

1 hour ago, Etaoin Shrdlu said:

I don't think there is much to worry about with AXA Thailand. I don't think AXA offered the personal accident policies that are at the heart of this problem and I suspect AXA Thailand has done proper risk assessment and made reinsurance arrangements as necessary for its risks. Local AXA management is probably sound and under the eye of the parent.

 

But a discussion of international insurers' operations in Thailand is worthwhile.  Most international insurers have locally incorporated subsidiaries or joint ventures in Thailand. This means that a policyholder would only have recourse against the balance sheet of the local subsidiary. If the local subsidiary went bust, the parent company would have no obligation to step in and make good on locally issued policies. Some international insurers, when asked about the security rating of their local operations, attempt to confuse the issue by citing the Standard & Poors rating of the parent company, which has little bearing on the claims-paying ability of the subsidiary. International insurers won't provide any kind of parental guarantee or cut-through clauses in their policies. This tells me they would be prepared to walk away from a steaming hole in the ground if they were presented with a big enough one. But in spite of this, a policyholder is probably better off holding a policy issued by the local operation of an international insurer than having a policy issued by some of the Thai insurers.

i was at Axa recently about renewing my PA insurance and they mentioned for their new policy they do income checks, now it seems it may be on the back of these large scam claims

Edited December 31, 2021 by scubascuba3

[kimamey]

9 hours ago, robblok said:

Let them go bankrupt, they wanted the premiums and the other way around if someone does not claim they don't refund either.

 

However if they do go bankrupt then there will be people who won't be covered. Also car insurance and other insurances might be invalidated too. So having them go bankrupt might hit a lot of people too.

I'm glad you made the point. 

If there's a backup system to pay claims if a company goes bankrupt as there is in many countries then yes let them go bust. If not then a lot of innocent policy holders could lose out but the owners of these companies will probably be fine. 

[robblok]

50 minutes ago, scubascuba3 said:

i was at Axa recently about renewing my PA insurance and they mentioned for their new policy they do income checks, now it seems it may be on the back of these large scam claims

What do you mean they do income checks, just curious in what context you mean ?

[Anna Rak]

Couldn't happen to a better bunch of Greedy uncontrolled Thieves, IMO! 

[Etaoin Shrdlu]

1 hour ago, scubascuba3 said:

i was at Axa recently about renewing my PA insurance and they mentioned for their new policy they do income checks, now it seems it may be on the back of these large scam claims

Insurers will often not provide higher amounts of insurance than the perceived economic value of the policyholder in order to avoid the moral hazard (the intention to create a loss in order to claim). You can guess the motivation of a person who earns 15,000 baht a month and has the commensurate lifestyle and modest financial obligations seeking to take out several million baht in cover. I suspect the current crisis brought on by the Covid policies is prompting greater scrutiny than in the past.

[Etaoin Shrdlu]

44 minutes ago, kimamey said:

I'm glad you made the point. 

If there's a backup system to pay claims if a company goes bankrupt as there is in many countries then yes let them go bust. If not then a lot of innocent policy holders could lose out but the owners of these companies will probably be fine. 

You're right.

 

The OIC does maintain a fund to address insurer insolvency. Part of the problem is that this fund is nowhere near adequate to address the scope of the current problem.

 

In all countries the taxpayers are the insurers of last resort. In the US, which has a heavily regulated insurance market, albeit by each of the 50 states, it was not enough to keep AIG from having to be bailed out by the taxpayer during the 2008 financial crisis. AIG was not bailed out because anyone felt sorry for AIG's shareholders or that AIG did not deserve to go under, but AIG's policies were essential to keeping vehicles on the roads, airplanes in the air, workers on the job, hospitals running, banks open and much more. The US government decided the potential damage to the economy and public was so great that they absolutely had to bail AIG out in order to avoid a widespread calamity. AIG shareholders did not fare well under the bailout and the company is now a much less robust entity than it was before the crisis.

[scubascuba3]

1 hour ago, robblok said:

What do you mean they do income checks, just curious in what context you mean ?

i was toying with changing from a policy I've had for 2 years to a new policy different terms, she didn't go into what checks are done but sounded like easier for me to just keep with existing policy which i did. Presumably they'd want to see monthly income similar to immigration

[Etaoin Shrdlu]

5 hours ago, John Drake said:

You said people can't be liable because "the company" is at fault and is publicly owned. Enron was publicly owned. People went to jail. BTW so did people in their accounting firm, Arthur Andersen, which itself was convicted and shut down. I'm glad you don't do accounts for me. Sorry for your customers.

 

Directors and officers of a company can be held personally liable for their errors and omissions in civil suits, but employees who do not make significant decisions and have little autonomy are seldom held personally liable for the actions they perform within the scope of their jobs, so it is difficult to hold a rank and file employee liable for damages. Actions with intent to harm the company or criminal activities are another matter.

 

The Enron executives that went to jail were convicted of fraud. I don't think the current Covid insurance crisis involves fraud, but instead involves extremely poor business decisions and underwriting, perhaps as a result of breaches of oversight duty on the part of the company's directors and officers. It may or may not result in directors' and officers' liability suits against these individuals.

 

Nobody at Arthur Andersen went to jail. The company's conviction for obstruction of justice was overturned by the Supreme Court in 2005, but by that time the damage was done and AA was gone.

 

 

[robblok]

Just now, scubascuba3 said:

i was toying with changing from a policy I've had for 2 years to a new policy different terms, she didn't go into what checks are done but sounded like easier for me to just keep with existing policy which i did. Presumably they'd want to see monthly income similar to immigration

Ah ok otherwise they wont accept you. Got it did not really understand but was curious about it. I thought it had something to do with claims or something like that.

[robblok]

1 minute ago, Etaoin Shrdlu said:

 

Directors and officers of a company can be held personally liable for their errors and omissions in civil suits, but employees who do not make significant decisions and have little autonomy are seldom held personally liable for the actions they perform within the scope of their jobs, so it is difficult to hold a rank and file employee liable for damages. Actions with intent to harm the company or criminal activities are another matter.

 

The Enron executives that went to jail were convicted of fraud. I don't think the current Covid insurance crisis involves fraud, but instead involves extremely poor business decisions and underwriting, perhaps as a result of breaches of oversight duty on the part of the company's directors and officers. It may or may not result in directors' and officers' liability suits against these individuals.

 

Nobody at Arthur Andersen went to jail. The company's conviction for obstruction of justice was overturned by the Supreme Court in 2005, but by that time the damage was done and AA was gone.

 

 

Your right, but John Drake wont listen, he knows best. Of course fraud will mean that someone can be held liable. But this is not fraud, its more like you said extremely bad business. Nobody benefitted from this there was no intent to defraud. 

 

Plus he was talking about holding the employees that sold the policies liable, who like you said preformed in the scope of their job and did not do any bad things. His comparison with boiler rooms was also crazy. Don't expect him to acknowledge it as he is one of those guys who hears a few things and thinks they apply in this case.

 

Its tiresome to debate with people who don't have some basic knowledge. I doubt that anyone will be held liable, they might get fired for being stupid and destroying the company where they work. There certainly was no intent to defraud or anything. 

[Etaoin Shrdlu]

15 minutes ago, robblok said:

Your right, but John Drake wont listen, he knows best. Of course fraud will mean that someone can be held liable. But this is not fraud, its more like you said extremely bad business. Nobody benefitted from this there was no intent to defraud. 

 

Plus he was talking about holding the employees that sold the policies liable, who like you said preformed in the scope of their job and did not do any bad things. His comparison with boiler rooms was also crazy. Don't expect him to acknowledge it as he is one of those guys who hears a few things and thinks they apply in this case.

 

Its tiresome to debate with people who don't have some basic knowledge. I doubt that anyone will be held liable, they might get fired for being stupid and destroying the company where they work. There certainly was no intent to defraud or anything. 

From what I've been able to put together, I haven't been able to see any way in which this rises to the level of fraud. Bad business decisions, yes, but it is difficult to hold directors and officer liable for simply making a bad business decision, although this one appears to be at the extreme end of the spectrum.

 

It becomes another matter if any of the directors or officers failed to follow procedures in getting necessary approvals when taking a decision or if they did something outside the scope of their authority or had a specific lapse in their duty to advise or inform or otherwise discharge their duty. We may or may not see this play out in the public sphere.

[robblok]

4 minutes ago, Etaoin Shrdlu said:

From what I've been able to put together, I haven't been able to see any way in which this rises to the level of fraud. Bad business decisions, yes, but it is difficult to hold directors and officer liable for simply making a bad business decision, although this one appears to be at the extreme end of the spectrum.

 

It becomes another matter if any of the directors or officers failed to follow procedures in getting necessary approvals when taking a decision or if they did something outside the scope of their authority or had a specific lapse in their duty to advise or inform or otherwise discharge their duty. We may or may not see this play out in the public sphere.

But the mitigating circumstances for these people are that a large group of companies made the same mistakes. So many of them made the same mistake. That will help them and shows that it was a common error and they all used the wrong data. (or they copied eachother)

[new2here]

Here’s my thoughts… and they are more from a realists point of view.

 

I wholly agree that the insurers themselves largely created this problem vis-a-vis their willingness to write C19 policies and at the premium levels they chose … that’s the perils of insurance ..: there’s a risk one assumes when underwriting…. so I agree that this is their (the insurance companies) problem

 

THAT SAID…

 

i ALSO think allowing a large private insurer to effectively go bankrupt would be even MORE detrimental to the larger insurance system in the long game….   I’m not sure of Thai law, but IF an insurer effectively goes insolvent, then one of two things would happen …

 

Either future claims would go unpaid or become unsecured liabilities during some form a bankruptcy/restructuring process … with either a massively delayed payout date or a haircut for all claims….

 

or

 

The government would have to step in and either backstop them, guarantee the claims or take some kind of equity/debt position in the failing insurer, to ensure minimum operating liquidity.

 

If an insurer is simply allowed to go into liquidation the economic pain inflicted by a raft of legitimate but unpaid claims would be massive …  but it’s going to be unpopular for a government “bailout” as well.

 

but.. to me… I don’t see there’s many options here …. letting an insurer go under and leaving policy holders with unpaid claims and either a massive waiting time for payment or taking a hair cut on their claim would be hugely detrimental to the stability of the larger domestic insurance market…. but the government stepping in backstopping or taking a equity/debt position to add liquidity would also come with political costs to bear…

 

but I don’t think there’s a choice here.. the larger insurance market HAS TO survive and a part of that is the perception of prospective policyholders of its stability and long term financial viability… while not all insurers will face this potential claims-liquidity crisis, the industry might come under extreme pressure and that, to me, doesn’t bode well for a service that, while privatized, is really a essential service. 

Edited December 31, 2021 by new2here

[madmitch]

It was a dreadful error of judgement by the insurers to issue these policies. The OIC are not blameless either as they allowed the policies to be issued. All new coverages in Thailand must be approved by the OIC and usually this is quite a long process; somehow this got rushed through.

 

It wouldn't surprise me if the big banks used their influence as most of these policies, I believe, were sold through the banks and not direct, and this involves hefty commissions. I don't know how much but it's not unknown for the banks to make more than the insurers. This adds another level of difficulty in declaring existing policies invalid and returning premiums.

 

It's a difficult one; on the one hand it is correct that the policies were purchased in good faith, claims should be honoured but this would likely cause bankruptcy for the insurers who would subsequently be in no position to pay further claims. Alternatively they void the policies, with approval from the OIC, and refund the premiums to those that haven't claimed, however they would surely have to honour existing claims. This could still prove financially unviable.

 

I don't know when they stopped selling; I'd guess around the time of the third, most virulent wave. There are still several months of cover to go and the omicron variant looming things will only get worse.

 

This needs sorting.....and soon.

 

 

[Adumbration]

4 hours ago, robblok said:

If what you say is true, how does it make sense that the government did not allow them to cancel policies?

 

If they were so closely connected im sure that their pleas for help would already been awnsered. 

 

Can you explain this to me ? 

Pleas for help are just window dressing.  This is how it will unfold.  The companies will declare bankruptcy and default on all policies.  The owners/directors will already have their capital offshore.  When they are ready they will start up a new insurance entity.  

[Etaoin Shrdlu]

4 minutes ago, robblok said:

But the mitigating circumstances for these people are that a large group of companies made the same mistakes. So many of them made the same mistake. That will help them and shows that it was a common error and they all used the wrong data. (or they copied eachother)

Yes, that would support the position that this is was a bad business decision that was widely taken within the industry and possibly defend against a D&O suit. I'm also thinking about the fact that the OIC approved the cover being used as a defense as well.

 

Another issue I've not been able to figure out is why the OIC would prohibit the insurers from cancelling mid-term if their policies' terms and conditions had cancellation clauses that allowed them to do so. I heard that some insurers sought to cancel based upon material change in risk, but the OIC kicked that back by saying they could only do so if something about the policyholder had changed, not that the over-all risk presented by the pandemic had. Perhaps these policies don't allow for cancellation by the insurer, but that's not typical. Or there may be other elements in play.

 

 

[Myran]

Edited December 31, 2021 by Myran

[IraqRon]

This clears up the reasons that some many Thais are resisting the vacs.  The thought of a big payout for having covid , real or a scam with crooked doctors, is too tasty for them to resist. 

Was this policy dictated by the govt. to the ins. companies.  

[cocoonclub]

On 12/31/2021 at 4:26 AM, aussiexpat said:

Simple solution, stop the ridiculous hospital mandatory for covid positive and do like the rest of the World and only go to hospital if you are actually really sick

It’s not a “simple solution”, it’s utter nonsense that has nothing to do with or would solve the issue here. Next time read the topic before replying off-topic. 

[freedomnow]

On 12/31/2021 at 8:09 AM, Don Chance said:

Emirates just dropped their free multi-risk insurance. That was a sweet deal, mine is still valid until end of Feb, then i will have to switch to regular travel insurance, about $100 a month. I've had about $500 in claims and the ticket was only $900. lol.

 

https://www.emirates.com/th/english/before-you-fly/multi-risk-travel-insurance/

It was December 1st it changed to covid cover only, and it's not 'free' if you price compare the same flight by KLM on same route etc.

 

A thing is only free when you don't have to pay a penny, and even then its an enticement otherwise.

[Sheryl]

On 1/1/2022 at 2:02 PM, IraqRon said:

This clears up the reasons that some many Thais are resisting the vacs.  The thought of a big payout for having covid , real or a scam with crooked doctors, is too tasty for them to resist. 

Was this policy dictated by the govt. to the ins. companies.  

 

Of course not and only a tiny minority of the population holds these policies, which stopped being issued before most of the country even had access to the vaccines.

 

Whatever the few people holding such plocicies decided to do, ti would not be visible on a population scale.