Must Read What happens to us when Thai insurance companies go bankrupt?

[webfact]

I am sure many of you read last week, about the Thai insurance company called Southeast Asia Insurance that was unable to meet its commitments and filed to cease trading.

Certainly, many of us were concerned in case other companies may go the same way.

The latest information is that Thailand’s insurance business regulator has indicated that approval has not been granted for Southeast Asia Insurance to cease operations and that all existing insurance policies are still valid. 

 

The Office of Insurance Commission (OIC) explained that Southeast Asia Insurance filed for the termination of its business with the OIC, but approval has yet to be granted. 

 

The office has established a working committee to scrutinize relevant details, with the aim of preserving the benefits of insurance policyholders and other stakeholders as well as ensuring the legality of the move.
 
General Insurance Fund 

 

The OIC noted that the General Insurance Fund exists to protect those entitled to payment in accordance with insurance claims in cases where an insurance company’s license is revoked. 

 

The fund is also intended to foster stability and reliability for the insurance business.
 
The office said the fund does not cover cases of an insurance company ceasing its operations but assured that public concern was unwarranted. 

 

It explained that Southeast Asia Insurance cannot shut down or cease operations until it receives approval to do so from the OIC, adding that all current insurance policies are still valid.

 

Well, if the Thai General Insurance Fund will not cover insurance companies that go bankrupt before their licence is revoked, then where does that leave us?

 

Major Operation

 

If I have understood their last comment correctly, if I am presented with a large bill by my private hospital, how am I as an expat likely to know in advance if my selected insurance company is in financial difficulties?

 

With the current wave of claims for Covid, governments around the world are likely to have to eventually cover the shortfalls.

 

 

However, as insurance companies try to balance their books, increasingly genuine cases may be turned down just on a minor condition.

 

I bet most insurance companies have much more staff dealing with claims, than those in the sales departments, who sell us these expensive packages in the first place.

 

Is it financially viable?

 

With preconditions and clauses stating the insured must pay the first amount of costs, I wonder sometimes is it worth it.

 

Of course, most expats have insurance cover before they came to Thailand.

 

Others feel that if they wish to travel, regulations state you need insurance to reenter Thailand.

 

Therefore, many policies are bought for political reasons, rather than for insurance peace of mind.

 

What do you feel about the current system in Thailand?

 

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[Henk Langeweg]

This is for medical insurance but what if a major Bank collapses? How good will the government guarantee be?

[new2here]

to me, i don’t think the real risk is the insurer going bankrupt and unable to pay claims… I’ll bet that there will be some kind of government back stop - because in the larger sense, it’s just not viable to have an insurance industry that doesn’t have the general publics confidence in its financial stability…. much like major banks… 

 

While insurance companies are never going to “win” in the court of public opinion or perception, they DO offer a service that for many IS a critical must-have… so to say “just let them go under” isn’t, IMHO, a longer term viable option.

 

At the end of the day, the national government can’t really and truly go “broke” per se. They have the national treasury etc to back stop their liquidity needs.. So, IF the national government will end up being the safety net- then i’m confident that creditors (like policyholders) WILL get paid..

 

Where I DO have concern is IF the government becomes so overextended in its monetary policy you create a situation of massive runaway inflation - think Venezuela..  So… sure, you got paid… you eventually got your BXXXX claim paid…. BUT what if inflation becomes so runaway that the purchasing power of your BXXXX becomes so eroded- then what? 

That to me is where I see more real risk… not so much that one or two insurers become insolvent… I’m sure there’s sufficient capital within the insurer, any industry liquidity fund and ultimately a national backstop funding action to cover any claims. 

[ChipButty]

1 hour ago, Henk Langeweg said:

 what if a major Bank collapses? How good will the government guarantee be?

That was recently in the news I think you are only covered up to 1 million baht

[khunPer]

5 hours ago, Henk Langeweg said:

This is for medical insurance but what if a major Bank collapses? How good will the government guarantee be?

It's fairly recently been reduced to one million baht.

 

In Europe it's around 100.000 euro, so relative little higher, if you compare with the buying power of your money in Europe vs. Thailand.

 

Nothing stops you from using more than one bank - the same in Europe - and you can also place some money in securities like Fund Books (mutual funds), bonds, or the stock market...????

[RichardColeman]

God help them if car insurers just give up with the ludicrous thai drivers

[StayinThailand2much]

5 hours ago, Henk Langeweg said:

This is for medical insurance but what if a major Bank collapses? How good will the government guarantee be?

If only one bank, I think they could keep it afloat, but I wonder if they actually would. Also, if, for some reason, there was a major banking crisis, heaven knows how they could guarantee deposits and survival for all banks.

[vandeventer]

6 hours ago, new2here said:

to me, i don’t think the real risk is the insurer going bankrupt and unable to pay claims… I’ll bet that there will be some kind of government back stop - because in the larger sense, it’s just not viable to have an insurance industry that doesn’t have the general publics confidence in its financial stability…. much like major banks… 

 

While insurance companies are never going to “win” in the court of public opinion or perception, they DO offer a service that for many IS a critical must-have… so to say “just let them go under” isn’t, IMHO, a longer term viable option.

 

At the end of the day, the national government can’t really and truly go “broke” per se. They have the national treasury etc to back stop their liquidity needs.. So, IF the national government will end up being the safety net- then i’m confident that creditors (like policyholders) WILL get paid..

 

Where I DO have concern is IF the government becomes so overextended in its monetary policy you create a situation of massive runaway inflation - think Venezuela..  So… sure, you got paid… you eventually got your BXXXX claim paid…. BUT what if inflation becomes so runaway that the purchasing power of your BXXXX becomes so eroded- then what? 

That to me is where I see more real risk… not so much that one or two insurers become insolvent… I’m sure there’s sufficient capital within the insurer, any industry liquidity fund and ultimately a national backstop funding action to cover any claims. 

So what's better having medical insurance that eats away more than half of your pension when your are over 70 if you can get it.. Or having the insurance than when you need help they say sorry F- off. Now that's a real hard one!!!

[Surasak]

As far as Thai Banks are concerned. how many are owned/run by the Thai government? If one goes under, will they all follow due to the 'guaranteed' pay out? This shouldn't happen if they are run as separate entities.   

[Liverpool Lou]

2 hours ago, StayinThailand2much said:

if, for some reason, there was a major banking crisis, heaven knows how they could guarantee deposits and survival for all banks.

"...heaven knows how they could guarantee deposits and survival for all banks".

The government does not guarantee all deposits, nor all banks, but there have been financial crises in the past and most mainstream, retail banks pulled through.

[hotchilli]

8 hours ago, Henk Langeweg said:

This is for medical insurance but what if a major Bank collapses? How good will the government guarantee be?

From my experience a Thai guarantee in cases where it has to pay-out is usually worthless.

 

[hotchilli]

3 hours ago, RichardColeman said:

God help them if car insurers just give up with the ludicrous thai drivers

Most don't bother with insurance if the car is older than a few years.

[Sqoop]

2 hours ago, StayinThailand2much said:

If only one bank, I think they could keep it afloat, but I wonder if they actually would. Also, if, for some reason, there was a major banking crisis, heaven knows how they could guarantee deposits and survival for all banks.

I suppose someone else will already have said it. But after the 2008 crisis bail in laws were passed in most countries. So in the event of a major banking crisis creditors will be bailed in ( if a reformed banking entity can be re-floated )

[Liverpool Lou]

6 minutes ago, hotchilli said:

8 hours ago, Henk Langeweg said:

This is for medical insurance but what if a major Bank collapses? How good will the government guarantee be?

From my experience a Thai guarantee in cases where it has to pay-out is usually worthless.

You have experience with non-payouts from Thai bank collapses that had government guarantees?

[The Hammer2021]

3 hours ago, RichardColeman said:

God help them if car insurers just give up with the ludicrous thai drivers

An unusual, original and amusing thought...But I'm afraid your comment, in some quarters, might be considered  puerile nonesense by some people which is unfair..So keep 'em coming!

[new2here]

1 hour ago, vandeventer said:

So what's better having medical insurance that eats away more than half of your pension when your are over 70 if you can get it.. Or having the insurance than when you need help they say sorry F- off. Now that's a real hard one!!!

I would expect insurance to cover exactly and only what is listed in the policy documents… that’s what i’d prefer.  The reality is that insurance really is a legal instrument and as such is written like that … and since the “common” person isn’t so well versed in it, that’s perhaps where the so-called “gotchas” come from 

I think that the best way is to have some kind of agreed upon standard so that policies can be both written for clear common-man understanding AND also be legal/court ready should the need arise. 

 

As far as the costs for those over 70 relative to their incomes… that’s a hard one as i think there’s some actuarial data that will show a relationship between age and claims paid.. as such, Id expect policies for those at advanced age to have higher costs … now, how much that is, is of course going to be based on a number of issues… but unless you fundamentally chance how the whole process of insurance operates - from underwriting, to rates to claims, I don’t know that you’ll even be able to escape the paradigm of higher and higher costs for those at advanced age and at the same time , whose incomes tend to be either limited or fixed… I think there’s some hard truths in how it is currently set up and how it operates… and I think the only real way out is a total rethink of how the process works, priced, sold and regulated. 

[wensiensheng]

3 hours ago, RichardColeman said:

God help them if car insurers just give up with the ludicrous thai drivers

I was recently advised that the company insuring my car had ceased trading. I had to take out a new policy with a new company. Fortunately there was only a couple of months left on the old one

[The Hammer2021]

The 'Savundra' Insurance  scandal in swinging 60s England was covered in a couple of dramas about the 'Profumo' affair. It demonstrates how these things happen

[Clarkey611]

Any update on The One Insurance Company, please?

[Joules]

There might be some confusion about Southeast Asia Insurance.  There is also Southeast Insurance Public Company Limited also going out of business:  https://today.fox-24.com/news/81245.html

 

There goes my auto insurance on two vehicles.   I renewed it not long ago.  I suppose the premium I paid is now in the toilet.  Nice doing business with you, Thailand.

[verticalift]

9 hours ago, Henk Langeweg said:

This is for medical insurance but what if a major Bank collapses? How good will the government guarantee be?

Over the past 4 yrs the DPA has reduced guarantees on deposits from 10MTB, then down to 5MTB and now only 1MTB / bank.

Not much confidence in the banking sector here…..

Most all financially successful Thais and Expats will have multiple bank accounts with different banks.

[itsallmine68]

10 hours ago, Henk Langeweg said:

This is for medical insurance but what if a major Bank collapses? How good will the government guarantee be?

The Government covers each Bank account up to 1.000.000 Baht 

 

[itsallmine68]

If each entrant o Thailand that needed Insurance was made to pay say 400Baht then all torists would be covered. No need to worry if Insurance Compnancies would go backrupt as teh Government would be handling it.

If we use as an example the numbers pre Covid 40,000,000 tourists times 400 Bht = 16,000,000,000 Baht or $485,000,000 USD

Then forget insurance Companies

[Bangkok Barry]

9 hours ago, ChipButty said:

That was recently in the news I think you are only covered up to 1 million baht

Down from 5 million. Just to show you how much the government likes to protect the little people in favour of the large. We would expect nothing less since the party the little people voted in was overthrown. Again.

[Mattd]

5 hours ago, RichardColeman said:

God help them if car insurers just give up with the ludicrous thai drivers

You joke, my car is insured with South East!

[Richard 2020]

My Thai health insurance, reserves the right to increase the premium up to 100% in the event of unfavorable claims !
30% are just normal!

[rickudon]

Bank deposit guarantees ....... only work when one or two banks go bust. I was with Landsbanki in Iceland, when their financial sector went into meltdown, Iceland Government reneged on that deal. Fortunately, as their accounts were promoted in UK, UK government coughed up instead - but it did take a year or so to get money back.

 

Our car insurance company in Thailand went bust about 5 years ago - never got a penny back, fortunately no claim outstanding.

[BB1955]

Well I just had a fit with a well established Health Insurance company trying to get my treatment approved , then getting paid what they owed me . Im still not satisfied but I did get some coverage . So really your never safe ....

[Seismic]

Both my cars and my motorbike were on insurance from two companies that failed over three months ago. There is a 'possibility' that we may get a rebate, but we have basically had to re-insure them with another provider. In both cases the reason was given as covid claims.

[steven100]

what do you think happens .....        Lol