The proposed foreign shareholder must:
- be an insurance company, or a company engaged in a business that supports, or is related to, the insurance industry;
- have not less than 10 years of expertise and experience related to and supporting the insurance business;
- have financial stability and possess a credit rating, or have a parent company with a credit rating, of not less than “A,” which has been issued by a reputable credit rating agency with international network of business operations;
- have a clear direction in respect to its business operation policy and technology transfer plan, for the purpose of developing the Company’s business operation system, in order to promote the Company’s efficiency and ability to compete in the market; and
- have sufficient financial capability to support and promote the stability of the Company, or the overall insurance industry.
Within 90 days of receiving a completed application and supporting documents, the OIC is obliged under the Notification to consider and issue its recommendations to the Finance Minister. The Finance Minister will consider and issue the Permission (or a denial) within 90 days from the receipt of the OIC’s recommendations. In issuing the Permission, the Finance Minister has the authority to impose any rules or time conditions as deemed appropriate.
Once the Permission is issued, among other prescribed requirements, the Company must maintain Total Capital Available (TCA) of not less than THB 1 billion (~USD 30 million) for a non-life Company or THB 4 billion (~USD 120 million) for a life Company at all times, and throughout its business operation period. Any subsequent material change in the shareholding of the Company may require prior approval from the Finance Minister. Any dividend distribution is subject to restrictions prescribed under the Notification, which relates primarily to the Company’s ability to generate net profits and its compliance with its three-year business plan submitted to the Finance Minister and the OIC.
This appears to be a significant movement for the Thai insurance industry, especially on the life insurance side. For the past several years, there has been some direction toward liberalization on the non-life insurance side—possibly due to the various catastrophic events within Thailand over recent years.