01 | The regulator

The Office of Insurance Commission, under the supervision of the Ministry of Finance (OIC) regulates insurers, brokers and agents.

02 | Subsidiary/branch

Both are permitted for an insurer; however the OIC's current policy is not to grant new licences for either on the basis that the insurance company market requires consolidation.

Brokers can be individuals or a legal entity in Thailand. Only individuals can be insurance agents.

03 | FDI restrictions

Insurance and reinsurance companies

  • up to 25 per cent less one share permitted
  • up to 49 per cent with approval of the OIC
  • above 49 per cent with approval of the Minister of Finance

On January 18, 2017, the Ministry of Finance issued a notification which sets out the requirements to be met when applying for an approval (ultimately issued at Ministerial discretion) to allow >49 per cent foreign shareholding. These include the following: (i) demonstrating a sufficient Capital Adequacy Ratio; (ii) having in place a business plan for promoting stability for insurance companies or the insurance industry; and (iii) establishing minimum credentials of the proposed foreign shareholder (including industry experience and financial position). Any approval is additionally subject to prescribed minimum capital requirements (THB1 billion for non-life insurers and THB4 billion for life insurers), requirement for prior Ministerial approval for subsequent transfer of shares by the majority foreign in certain circumstances, requirement for prior Ministerial approval for the majority foreign shareholder to have more than a single life or non-life insurance presence, and any other condition the Minister sees fit.

04 | Control approvals

A change of shareholdings ≥ five per cent must be notified after the event to the OIC. A change in directors must be approved by the OIC.

05 | Minimum capital

Life insurer/reinsurer THB500 million (min registered capital)
General insurer/reinsurer: THB300 million (min registered capital)

THB$35.83 = US$1.00 at January 1, 2017

06 | Risk based capital

Yes – Eligible Capital/Risk Capital Requirement x 100 per cent = risk based capital.

Eligible Capital is equity, share premium, retained profits, issued price of preference shares, etc. less certain deductions. Assets are valued at market value with adjustments.

Risk Capital Requirement is capital charges for insurance risk, market risk, credit risk and concentration risk.

Solvency margin: minimum capital requirement of 140 per cent of risk based capital.

07 | Group supervision

No.

08 | Policyholder protection

Yes. The General Insurance Fund and the Life Insurance Fund (funded by industry levies) assist policyholders of nonlife and life insurers respectively in the event of revocation of an insurance licence. Payments are limited to THB1 million.

Following revocation of an insurance licence and prior to commencement of bankruptcy/liquidation proceedings, any insured with a claim under a policy will be entitled to payment firstly from securities placed by the insurer with the OIC, and secondly from the relevant fund. In insolvency proceedings, the policyholder will have priority over other creditors against any securities and unearned premiums reserves of the relevant insurer placed with the OIC.

09 | Portfolio transfers

No regime.

10 | Outsourcing

Insurer may not outsource 'core' functions, which include: risk underwriting and issue of policy, collecting premiums, accepting or rejecting claims and loss adjustment. With specific approval of the OIC, insurer may outsource certain 'support' functions, which include: paying claims under limited circumstance. Insurer may freely outsource 'other' non-core administrative functions, which include: Internal audit, accounting, IT and advisory services in respect of claims and back office functions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.