Sucheera Pinijparakarn
The Nation December 3, 2011 1:00 am
As premiums rise in line with flood risk, the private sector will be able to absorb the increase more easily than retail customers, said Jiraphant Asvatanakul, chairman of the association.
Even though the recent disaster will persuade the general public to buy insurance, all customers will have to accept higher premiums.
"Reinsurers have said they are ready to reinsure but the premiums must be higher, while industrial sectors have said they understand this. But we are concerned about household customers, because higher premiums mean they will have to bear a higher burden," he said.
He said the association had discussed the matter with the Office of the Insurance Commission in hopes of getting government assistance for household insurance customers.
Pravej Ongartsittigul, secretary-general of the OIC, said it had talked with the Finance Ministry about the concern over the higher premiums expected to make an impact next year.
"The discussion is not finalised yet. However, the country's infrastructure at present cannot prevent or mitigate natural disasters, and as a result, the public should accept that high premiums arise from high risk," he said.
"When the state has clear disaster management [measures in place] and can ensure such disasters will not hurt business operations or households, competition among reinsurers will occur and the premiums will be fair for all."
He said leading Japanese reinsurers had confirmed they would renew contracts because Thailand remains a potential investment base for Japanese investors.
Pravej said Lloyd's of London, the world's largest insurer providing specialist services, continued reinsuring Thai insurance companies.
He noted that about 40,000 vehicles were damaged by the floods, of which 20,000 are covered by first-class insurance. The damage amounts to about Bt2 billion.
Meanwhile, Finance Ministry permanent secretary Areepong Bhoocha-oom said he and Virabongsa Ramangkura, chief strategist for post-flood recovery, on November 29 met on Tuesday with executives of three major insurers in Japan, Sompo Japan Insurance, Tokio Marine and Mitsui Sumitomo, to discuss Thailand's future flood-prevention measures. Areepong said that the three firms, which have business worth Bt260 billion or 60 per cent of the insurance value in the seven industrial parks hit by floods, had insisted they would continue doing business in Thailand.
However, Areepong conceded that insurance premiums might rise because of higher risk and would drop later when the government puts in place flood-prevention measures.
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