OIC said insurance companies continue to be battered by the surge in claims from Covid policies, with lump-sum payments causing huge losses as these claims are depleting companies' capital reserves and liquidity.
Since the third wave of the pandemic erupted in the second quarter, two companies -- Asia Insurance and The One Insurance -- have been forced to shut down due to such issues.
Learning from Covid-19's impact on the industry, he said the OIC is considering setting up a new work unit to evaluate future emerging diseases to assess insurance risks. The unit would assist in designing insurance products, conditions, coverage and premium rates to lessen the effects new diseases would have on the stability of the insurance sector as a whole.
If the risks can be assessed correctly, insurance companies will not sell more policies than they can afford. Sixteen insurance companies offered Covid policies with lump-sum payments, but only two have had to close because the rest recognized the risks and their limits.
Several companies knew when to stop accepting new customers because they conducted effective risk analysis and put a cap on their sales. Hence, when claims from such policies surged, these companies were able to retain their capital funds and financial positions.
Two other non-life insurance companies with severe liquidity issues -- Syn Mun Kong Insurance (SMK) and Thai Insurance (TIC) -- also recently showed signs of recovery.
SMK informed the commission there is a group of investors interested in funding the company, while TIC successfully increased its capital reserves and is likely able to pay outstanding claims.
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