Government to shoulder Covid-19 insurance claims as insurers buckle under 60 billion baht payouts
Deputy Finance Minister Julapun Amornvivat has revealed that the Thai government may have to step in to assist with the hefty burden arising from Covid-19 insurance claims.
The grim situation has seen total payouts skyrocket to almost 60 billion baht, leaving non-life insurance companies in shambles and prompting the closure of those unable to meet the financial demands.
Julapun disclosed that the General Insurance Fund (GIF) under the Office of the Insurance Commission (OIC) lacks the necessary funds to cover the escalating claims. This dire circumstance has already led to the revocation of licences for several insurance companies, thrusting them into closure due to insufficient premiums and capital reserves.
Julapun highlighted the severity of the financial strain faced by the insurance industry.
“The government may have to partly bear this burden through the fiscal budget.”
The woes extend to Syn Mun Kong (SMK) Insurance, where a staggering 32 billion baht in outstanding claims, including 30 billion baht from 350,000 Covid-19 insurance policyholders, have overwhelmed the beleaguered company. Despite the potential injection of 50 billion baht by the government, the intricate verification process means that claim settlements may not occur swiftly.
The deputy finance minister emphasised the government’s commitment to bolstering the insurance industry’s oversight, promising a thorough review of existing legislation to close loopholes and safeguard consumers from such catastrophic financial fallout, reported Bangkok Post.
Last year, the Finance Ministry took drastic measures, revoking the licences of Asia Insurance, The One Insurance, Southeast Insurance, and Thai Insurance. These companies faced financial ruin, unable to fulfil a staggering 65 billion baht in outstanding claims from 700,000 desperate claimants. Insurance companies, now grappling with increased pressure, are required to contribute 0.50% of their annual premiums to the GIF, a significant jump from the previous 0.25%. The GIF’s current revenue stands at 6 billion baht as of this month, underscoring the critical need for immediate action to prevent further industry-wide collapse.
