In December 2023, Thailand’s Office of Insurance Commission (OIC) presented draft amendments to the country’s laws for life and non-life insurance, pointing to significant modifications ahead for the laws governing insurers. These amendments primarily aim to:
- Elevate governance standards within the insurance industry.
- Support compliance with the Financial Sector Assessment Program (FSAP) of the International Monetary Fund and the World Bank.
- Address current regulatory enforcement issues.
- Harmonize governance standards for insurance businesses with those for financial institutions.
The draft amendments involve changes to a wide range of regulatory areas; key changes include the following:
Corporate Governance
- Expanding the definition of directors to include representatives of foreign insurers’ branches in Thailand.
- Imposing the same standards of care and obligations on “persons having the authority to manage the company” as on directors.
- Requiring OIC approval for appointment and reelection of directors.
- Expanding the list of prohibited connected transactions to include lease of property.
Shareholding Requirements
- Requiring mandatory reporting to the OIC for individuals holding 5% or more of shares in an insurance company.
- Requiring regulatory approval for 10% shareholding and prohibiting exceeding the limit without OIC approval or compliance with subregulations.
Dividend Payments
- Empowering the OIC to issue subregulations on dividend payments from both life and non-life insurance companies.
Products and Distribution
- Permitting directors, staff, and employees to sell insurance products after obtaining relevant training from the OIC.
- Granting insurers discretion to set group insurance premium rates following regulations, methods, and conditions set out by the OIC without having to obtain OIC approval.
- Allowing insurers to underwrite foreign currency-based insurance.
- Allowing insurers to offer additional benefits beyond policy stipulations in compliance with the relevant OIC subregulations.
Capital Fund and Finance
- Establishing minimum capital fund requirements of approximately THB 1 billion for non-life and THB 5 billion for life insurers.
- Imposing sanctions if the capital fund falls below the required amount.
Other Issues
- Allowing outsourcing under future subregulations.
- Requiring auditors approved by both the SEC and the OIC to report corruption and be liable for misconduct of insurers that they audit.
- Extending actuarial license validity to five years (from two years) and requiring insurers to appoint at least one full-time actuary.
Business Transfers and Amalgamations
- Simplifying the novation process for insurance policies during business transfers.
- Stipulating that ongoing court cases are assigned to the transferee or the new company after completion of an amalgamation.
- Introducing additional offenses and liability for directors and management officers found liable for asset mismanagement, conflicts of interest, or fraudulent acts.
The amendments are currently under review by the cabinet, and the process of finalizing and enacting them still requires a significant amount of time. We will continue to monitor and provide updates on the status of these drafts.
For more details on the draft amendments, or on any aspect of insurance laws and regulations in Thailand, please contact Athistha (Nop) Chitranukroh at [email protected], Witchupong Chittchang at [email protected], or Thammapas Chanpanich at [email protected].
