Insurers seek nod to cancel Covid policies
Claims may reach unsustainable levels of 70% of risk capital next year
19 November, 2021
Insurers have urged the regulator to allow them to cancel Covid-19 policies as it estimated claims could reach 40 billion baht by the end of this year.
General insurers sold 14 million Covid policies this year, Anon Wangasu, chairman of the Thai General Insurance Association, said on Thursday.
Of the policies, 1.8 million were sold in the first quarter of this year and 13 million at the height of the third wave from April to June, when many people sought financial coverage.
As of Monday, he said, Covid claims exceeded 37 billion baht while insurers’ risk-based capital stood at 132 billion baht.
He expected Covid-19 claims to exceed 40 billion baht by the end of this year, or 30% on average of their risk-based capital prepared for all types of general insurance.
Mr Anon added the percentage could reach an unsustainable level of 60-70% in the event of a new wave. If that happens, 70 million policies of other types of general insurance could be affected.
As a result, Mr Anon urged the Office of the Insurance Commission (OIC) to allow them to exercise their right to cancel the Covid coverage policies.
He claimed Covid-19 was an emerging risk, with few data to support the accurate calculation of coverage and claims and pricing was initially based on available data at the time.
A condition for either party to unilaterally cancel an insurance policy is standard worldwide but the Thai regulator had issued an order on July 16 this year prohibiting insurers from doing so for Covid policies, he said.
The order had a retrospective effect on all policies in effect at the time instead of only new policies issued from that date as was a common practice, he said.
Mr Anon added the insurers had prepared remedial packages for holders of cancelled Covid policies.
For starters, a policyholder would get a 100% premiums refund, compared to a pro-rate based on the remaining time of the policy.
The customer could also choose to switch to other types of general insurance policies for a discount equivalent to two times the premiums refund in some cases.
In July, social media users started sharing experiences on being asked to cancel their Covid policies, leading to complaints to the OIC, which intervened in the same month by issuing the order stopping them from doing so.
At the request of the insurers, the regulator reviewed the order this week. It stood by its earlier decision but allowed for a cancellation on a case-by-case basis if customers agree to it.
Covid-19 insurance premiums start at about 750 baht for one-year coverage.
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