The Office of the Insurance Commission (OIC) said it will block the terminations if SMK fails to strictly adhere to all conditions stated in the contracts, according to OIC secretary-general Suthiphon Thaveechaiyagarn.
“We are in discussions with SMK and if it does not change its decision, we can exercise the registrar authority to require the company to honour the condition of the original insurance contracts,” Mr Suthiphon said. “The company may be charged fines as well.”
The warning came in response to SMK’s statement it was ending lump-sum COVID-19 insurance claims, terming the country’s pandemic situation a crisis with an entirely uncertain future.
Other COVID-19 insurers such as Bangkok Insurance, Muang Thai Insurance and Dhipaya Insurance publicly reassured their customers they have no intention to terminate contracts, and customers are still protected under their original contract.
However, Viriyah Insurance announced around 1pm yesterday it will not renew all COVID-19 insurance policies, then reversed course one hour later, saying it will keep the original contracts for existing customers and offer new COVID-19 insurance programmes to new customers, following a backlash.
Insurers are becoming overwhelmed by claims and general inquiries as COVID-19 deaths and hospitalisations continue to rise, while firms struggle to price risk amid the uncertainty.
When COVID first struck Thailand last year, insurance companies started to offer non-life COVID-19 insurance policies. Customers could buy B200,000 to B2 million of coverage for only B450 to B1,200 a year.
Now insurance companies find themselves not only covering claims by people legitimately suffering from the virus, but also from economically desperate people who purposely got infected to collect insurance money.
Earlier this month, the Thai General Insurance Association, an organisation representing private insurance firms in Thailand, warned people about fraud charges if they purposely catch COVID-19 to file an insurance claim.
Mr Suthiphon said the OIC usually urges insurance companies to consider their risk acceptance capacity before issuing claims.
The overall insurance industry remains strong despite the economic crisis, he said.
SMK released a statement on Friday saying it can exercise the right to terminate the lump sum COVID 2-in-1 insurance based on conditions in the contract, effective 30 days from the date the letter is received. The company will reimburse premiums, deducted by the promotion rate of the protection period, within 15 days after the termination’s effective date.
At the end of the first quarter, SMK’s capital adequacy ratio stood at 443%, a drop from 458% at the end of 2020. The company has the second largest market share for COVID-19 insurance protection, said an industry source who requested anonymity.
Anon Vangvasu, president of the Thai General Insurance Association, said the industry remains committed to providing risk management tools to the public, especially during this crisis.
“Our other members do not have plans to terminate their COVID insurance policies,” Mr Anon said.
The Thai Life Assurance Association is calling on its members to honour their original contracts as it is their duty to properly calculate risk before selling policies.
In the first six months this year, COVID insurance sales totalled B4.93 billion, picking up in April during the third wave. COVID claims totalled B1.78bn in the first half. Claims in May and June totalled a combined B1.54bn.