Thai Minister Kittiratt Trumpets Insurance Pool: Flood Coverage

[webfact]

FLOOD COVERAGE

Kittiratt trumpets insurance pool

WICHIT CHAITRONG

THE NATION

Deputy Prime Minister Kittiratt Na-Ranong has ambitious plans to create a giant reinsurer to provide flood coverage to local and regional industries, but critics say the government should step back as soon as possible and leave this task to private reinsurers when their confidence returns.

Speaking at a knowledge-sharing seminar on flood management hosted by the Asian Development Bank, the newly appointed finance minister yesterday said factories in the seven industrial estates that were swamped by last year's floods should not invest in their own dykes but should leave that to the estate operators.

The operators would have no need to collect money from their tenants, because premiums collected by the government-owned insurance pool would be used to finance dyke construction, he said.

He said the operators themselves could win soft-loan packages from the Government Savings Bank for the construction. The GSB plans to provide soft loans worth Bt15 billion to the seven affected operators with interest of 0.01 per cent per annum.

"They will get soft loans and meanwhile, under the government's Bt50-billion insurance scheme, premiums would also be used to finance the construction," Kittiratt told reporters on the sidelines of the seminar.

He said the three largest global reinsurers would either not deal with Thailand or would demand very high premiums.

"It's understandable, as global insurance firms do not believe that we have changed our habit of a relaxed attitude," Kittiratt said.

He said the insurance fund with initial capital of Bt50 billion could cover insured property and businesses worth Bt500 billion. And the premiums would be reasonable.

Asked what the lifespan of the insurance fund would be, he replied that it could become a new major reinsurer for the Asean region. "Why don't you think new reinsurers will emerge and provide service for the region?"

He said the government planned to invest Bt17 billion this year to build dykes, fix sluice gates and conduct other immediate projects that could mitigate flood damage. And in the medium and long terms, the government plans to invest Bt350 billion to ensure an end to severe flooding in the country.

Supavud Saicheua, managing director of Phatra Securities, however, suggested that the government should step back from the insurance game once things return to normal.

Currently, foreign insurers may not have confidence as they are waiting to see what the government is going to do, he said. But he expects confidence will come back after the government puts in place proper flood-management measures.

"Then we should leave the insurance business to the private sector. If the government continued to provide insurance coverage, it would not be fair for taxpayers," Supavud said.

Chakkrit Parapuntakul, director-general of the Public Debt Management Office, said the combined cost of post-flood rehabilitation could reach Bt1.4 trillion, while public spending for investment over the next two years is estimated at about Bt200 billion.

He said the Finance Ministry would borrow money from banks to set up an insurance fund if the government urgently wanted to do it.

-- The Nation 2012-01-20

[Buchholz]

He said the three largest global reinsurers would either not deal with Thailand or would demand very high premiums.

"It's understandable, as global insurance firms do not believe that we have changed our habit of a relaxed attitude," Kittiratt said.

Gee.... not hard to imagine why they would think that about the relaxed attitude of the incompetent government that mismanaged the floods to point of 800+ deaths. A government full of indicted terrorists. A proxy government run by an overseas fugitive, etc. etc.

.

[phiphidon]

He said the three largest global reinsurers would either not deal with Thailand or would demand very high premiums.

"It's understandable, as global insurance firms do not believe that we have changed our habit of a relaxed attitude," Kittiratt said.

Gee.... not hard to imagine why they would think that about the relaxed attitude ...................../snip

.

I don't think you'll find that the Global Insurance firms have changed their collective minds after 6 months of the PTP government - Rather after the decades of Thai Government and Public Services culpability in ignoring flood disaster and mitigation problems and lack of investment, much as I know you would just love it to be blamed on this government and attempt to do so.

[Soutpeel]

Gee.... not hard to imagine why they would think that about the relaxed attitude of the incompetent government that mismanaged the floods to point of 800+ deaths. A government full of indicted terrorists. A proxy government run by an overseas fugitive, etc. etc.

And we could add that international insurance companies would be a bit adverse to providing flood insurance in a country where large tracts of the country are known flood plains...!!!!, the Insurance industry is based on the assessment and mitigation of risk, so why would they provide flood insurance where the risk of flooding is a high risk ?

If the goverment wishes to provide flood insurance then they should underwrite it, cant see any sane insurance companies lining to up to underwrite this, unless the premiums are sky high and lots of excemption clauses

Edited January 20, 2012 by Soutpeel

[geriatrickid]

Not an auspicious start to his reign as Minister of Largesse.

The concept of an insurance pool is not original. The US flood insurance program is an example of how a government sponsored pool encourages idiotic building decisions. Japan has similar with its Earthquake pool. The UK had it with the terrorism pool. Florida had it with its windstorm pool. The private insurers will indeed participate, charging for management, claims and actuarial services. They will not however, have to assume any risk. It is a windfall for the private insurance sector who will be delighted for this proposal. The Thai taxpayers, on the other hand may ask why they are being asked to subsidize private industry and land owners that build in flood zones.

[zzaa09]

He said the three largest global reinsurers would either not deal with Thailand or would demand very high premiums.

"It's understandable, as global insurance firms do not believe that we have changed our habit of a relaxed attitude," Kittiratt said.

Gee.... not hard to imagine why they would think that about the relaxed attitude ...................../snip

.

I don't think you'll find that the Global Insurance firms have changed their collective minds after 6 months of the PTP government - Rather after the decades of Thai Government and Public Services culpability in ignoring flood disaster and mitigation problems and lack of investment, much as I know you would just love it to be blamed on this government and attempt to do so.

Yep. That's the bottom line. The continuing problems, issues, and mind sets go back decades.

Has really nothing to do with political division or differences.....it's a Thai thing.

[DGS1244]

A Thai Owned and run Re-insurer cannot afford to pay the claims now, do they really think this will change anything. They still do not have a clue as to how large the final financial loss to Thailand will be. Watch the figures in the years to come. Total loss will be one of the largest in history.

[wintermute]

I predicted that global reinsurers would balk at covering Thailand again months ago. These people usually have the best actuaries, lawyers, and adjusters in the business doing analysis on benefits. If they think there are zero benefits in insuring Thai industry then the problem must be serious. The government insurance scheme is laughable and there will be incredible corruption involved. I bet very few industries will get payouts in the event of another crisis. It'll be like so many thai life insurance schemes where people never see any money.

Edited January 22, 2012 by wintermute

[slapout]

Another potential way to fleece the countries coffers as well as those paying in for protection. He mentions new reinsures, wonder who will be the slient partners in that, how much taxpayer seed money furnished and then the possibilty of monies being moved out of country. This could eclipse the airport construstion project in graft possibilities/probilities.

[TAWP]

Not an auspicious start to his reign as Minister of Largesse.

The concept of an insurance pool is not original. The US flood insurance program is an example of how a government sponsored pool encourages idiotic building decisions. Japan has similar with its Earthquake pool. The UK had it with the terrorism pool. Florida had it with its windstorm pool. The private insurers will indeed participate, charging for management, claims and actuarial services. They will not however, have to assume any risk. It is a windfall for the private insurance sector who will be delighted for this proposal. The Thai taxpayers, on the other hand may ask why they are being asked to subsidize private industry and land owners that build in flood zones.

The government should stay out of the market place and not 'take over' some functions, that in the end ends up being pricy and poorly managed at the decrement of the tax-payers.