Practical Law Insurance and Reinsurance Global Guide 2018

February 20, 2018

Practical Law Insurance and Reinsurance Global Guide 2018 – Thailand

Practical Law

The Practical Law Insurance and Reinsurance Global Guide 2018 presents a Q&A-style overview of insurance and reinsurance laws and practices in major jurisdictions around the world. The Thailand chapter of the guide was written by members of Tilleke & Gibbins’ regional insurance practice, including Aaron Le Marquer, Athistha Chitranukroh, and Kitti Thaisomboon. The chapter provides details on the following subjects:

Market trends and regulatory framework: Trends in the insurance and reinsurance markets over the last 12 months and the regulatory framework for insurance and reinsurance activities.
Regulation of contracts: Contracts of insurance, contracts of reinsurance, and regulations.
Corporate structure: Forms of corporate organizations insurers can take.
Regulation: Regulated insurers, non-insurance business and restrictions, and statutory limits and restrictions on transferring risk.
Operating restrictions: Authorization and licensing, restrictions on ownership or control, key ongoing requirements for authorized or licensed entities, penalties for noncompliance, and restrictions on persons to whom services can be marketed or sold.
Reinsurance monitoring and disclosure requirements: Extent to which reinsurance company must monitor claims, settlements, and underwriting of a cedant company, and disclosure/notification obligations of a cedant company to a reinsurance company.
Policies: Form and content requirements for insurance policies, commonly found clauses, facultative and treaty reinsurance, implied terms, customer protections, and standard policies and terms.
Policy claims: Establishing an insurance claim, third-party insurance claims, time limits, enforcement, remedies, and punitive damage claims.
Insolvency: Regulatory framework to dealing with distressed insurers or reinsurers, protection measures, “drop down coverage” in insurance policies, and setting-off mutual debts and creditors.
Taxation: Tax treatment for insurers, reinsurers, and other entities.
Dispute resolution: Special procedures and venues for dealing with complaints or disputes, enforceability of arbitration clauses, and choice of forum, venue, and applicable law clauses.
Reform: Proposed reforms relating to the provision of insurance or reinsurance services.

Practical Law Company is a legal publishing company that provides legal know-how for business lawyers. Tilleke & Gibbins also contributed the Cambodia, Laos, and Vietnam chapters of the guide.

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Related Professionals

Aaron Le Marquer

Partner and Deputy Director, Dispute Resolution

Thailand

+66 2056 5555

Email

Athistha (Nop) Chitranukroh

Partner and Director, Corporate and Commercial

Thailand

+66 2056 5600

Email

Kitti Thaisomboon

Thailand

+66 2056 5555

Email

RELATED INSIGHTS

October 9, 2024

Thailand Issues Guidelines on Customer Due Diligence for Insurance Companies

Thailand’s Anti-Money Laundering Office has released new guidelines on customer due diligence (CDD) for insurance companies to outline anti-money laundering and counter-terrorism financing measures based on the Anti-Money Laundering Act B.E. 2542 (1999). The previous guidelines were revoked and replaced by these guidelines. The guidelines include seven key measures: Anti-money laundering and counter-terrorism financing policy: Insurance companies must establish a policy in Thai that outlines the organization’s approach to assessing, managing, and mitigating risks related to money laundering, terrorism financing, and proliferation. Risk management framework: Insurance companies’ frameworks for risk management are to be divided into three stages: (1) internal risk management, (2) risk assessment before customer onboarding, and (3) ongoing customer risk management. CDD before engagement with customers: Insurance companies must implement a rigorous approval process to verify customers’ identities. Customer information review and transaction monitoring: Insurance companies must update customer information and the list of banned transactions to ensure compliance with current risk profiles. Enhanced CDD for high-risk clients: Insurance companies must apply a stricter level of verification and monitoring measures for high-risk clients, including reviews of financial transactions. Third-party reliance and subsidiary controls: Reliance on third parties is allowed only in processes for customer identification and verification of identity. Internal controls and policies for subsidiaries or affiliates must be updated regularly. Suspicious transaction reporting: Insurance companies must report any suspicious transactions, particularly whenever CDD is not available. For more details on the CDD guidelines, or on any aspect of insurance and anti-money laundering regulations in Thailand, please contact Athistha (Nop) Chitranukroh at [email protected], Witchupong Chittchang at [email protected], Ajaree Trachukul at [email protected], or Sireethorn Wijan at [email protected].

October 2, 2024

Thailand Sets Premium Rates for Policies Purchased Directly from Insurance Companies

Thailand’s Office of Insurance Commission (OIC) has issued orders announcing the premium rates for insureds who purchase insurance policies directly from life and non-life insurance companies. The orders, which were issued on September 2, 2024, allow insurance companies to set lower premium rates for insureds who purchase insurance policies directly from them, compared to those approved earlier by the OIC. Under the orders, both life and non-life insurance companies selling insurance policies directly to insureds may set the premium rate below the premium rate earlier approved by the OIC, but the discount may not exceed: 30% of the insurance premium for all types of insurance policies; and 35% of the insurance premium for insurance policies that utilize innovation or are sold through electronic channels. Here, “insurance policies that utilize innovation” means insurance policies that are currently being tested or have successfully met the objectives of the Insurance Regulatory Sandbox or the Product Innovation and Tailor-Made Sandbox, as approved by the OIC. The insurance companies may set the above two premium rates under the following conditions: The insurance contract must be entered into between September 1, 2024, and November 15, 2024; and The coverage start date of the insurance policy must not be later than December 31, 2024. For more details on the OIC’s orders regarding premium rates for insureds who purchase insurance policies directly from life and non-life insurance companies, or on any issue concerning insurance regulations in Thailand, please contact Athistha (Nop) Chitranukroh at [email protected], Witchupong Chittchang at [email protected], Ajaree Trachukul at [email protected], or Sireethorn Wijan at [email protected].

July 23, 2024

Thailand Prepares Naming Criteria for Insurance Brokers

Thailand’s Office of Insurance Commission (OIC) recently opened a public hearing on draft notifications regarding criteria, procedures, and conditions for naming life and non-life insurance brokerage businesses. The draft notifications aim to establish guidelines for naming and describing such brokerages. Key Principles Licensed insurance brokers must use “life insurance” or “non-life insurance” in their business name. When establishing an office, brokers must display a visible nameplate at the office front, starting out with the Thai words for “life insurance broker office” or “non-life insurance broker office” and the broker’s name; any signs indicating the office location must adhere to these same naming conventions. Inside, offices must display the insurance broker’s license and the power-of-attorney for receiving insurance premiums at the office. Noncompliance with these key principles may result in the OIC taking corrective action. Outlook After the draft notifications pass the public hearing stage, which closes on July 19, 2024, the OIC will consider the feedback and finalize the notifications. The duration of this process depends on the complexity of the notification and the public feedback. Normally, each notification takes at least 3–6 months before issuance. For more details on the OIC’s draft notifications or on any issue concerning insurance regulations in Thailand, please contact Athistha (Nop) Chitranukroh at [email protected], Witchupong Chittchang at [email protected], Ajaree Trachukul at [email protected], Thammapas Chanpanich at [email protected], or Sireethorn Wijan at [email protected].

May 27, 2024

Thailand Considers Easing Foreign Shareholding and Board Limits for Life Insurance Companies

Thailand’s Office of Insurance Commission (OIC) has opened a public hearing period on a draft notification from the Ministry of Finance (MOF) that would relax foreign shareholding and board limits for life insurers. The hearing period runs until May 31, 2024. Key principles of the draft notification are outlined below. Life Insurer Qualifications Life insurers may apply for permission to exceed 49% foreign shareholding or have a majority of foreign directors if: They operate a business that may cause harm to insured parties or the public and either (1) the OIC has directed the company to improve its status or adjust its capital, or (2) the company’s actions may have a significant impact on the insurance industry, causing significant compensation burdens and affecting the company’s capital adequacy ratio (CAR); Their shareholders are unable to increase capital; and They are unable to attract Thai investors to increase the capital necessary to ensure stability and the long-term operation of the business. Foreign Shareholder Qualifications Eligible foreign shareholders must: Be an insurance company or participate in the insurance industry; Have at least 10 years of relevant experience; Demonstrate financial stability and possess a credit rating (or have a parent company with a credit rating) of at least “A” from a reliable credit rating agency; Present a clear business plan, financial resolution plan and strategy, and technological and expertise development plan to develop and promote the company’s efficiency and competitiveness in the industry; and Be capable of investing and increasing the capital to at least THB 2 billion to maintain stability and maintain a CAR of at least 250%. In addition, life insurers are required to present a clear restructuring plan and new organization chart to the OIC for further approval by the MOF. For more details on the MOF’s notification regarding criteria

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February 20, 2018