Regulator to bolster disaster risk management

The Office of the Insurance Commission (OIC) is proceeding with plans to strengthen Thailand's disaster risk management framework through a national disaster playbook and a proposed disaster insurance fund aimed at cushioning the economic impact of future catastrophes.

OIC secretary-general Chuchatr Pramoolpol said the initiative comes as climate-related risks such as severe storms and earthquakes increasingly threaten households, businesses and fiscal stability.

As risks escalate, the insurance sector should play a critical role in absorbing large losses and reducing the burden on government finances during major disasters, he said.

The proposed disaster insurance fund is being studied by the OIC and stakeholders, with a first draft of the framework expected later this year.

The draft will be submitted to the OIC board for consideration before being forwarded to the Finance Ministry and later elevated for national approval, said Mr Chuchatr.

The fund is designed to serve as a national risk management mechanism capable of handling catastrophic losses that could exceed the government's emergency budget capacity.

Under the framework, insurers would help absorb damages through insurance and reinsurance arrangements, including risk transfers to global reinsurance markets.

The proposed framework is expected to initially focus on large-scale disaster risks, particularly earthquakes, floods and windstorms, although the final scope remains under review, he said.

FASTER CLAIMS PAYMENTS

The OIC is also preparing a comprehensive disaster playbook -- an operational handbook intended to improve coordination among insurers, regulators and related agencies during emergencies.

The playbook is expected to establish clear procedures for claims handling, define responsibilities among stakeholders and speed up compensation payments to affected policyholders. The project would also help the regulator gather data more efficiently, identify insured properties and track how insurers manage claims after disasters occur.

The OIC said the framework aims to minimise disputes and delays in claim settlements, particularly in complex cases involving overlapping insurance policies or difficult damage assessments, such as earthquake-related structural cracks.

Lessons from Thailand's catastrophic flood in 2011, when insurers were able to settle around 95% of retail claims within two months, indicate a clearer disaster response structure could improve public confidence, said Mr Chuchatr.

The playbook would also improve post-disaster management and ensure insurers can continue fulfilling contractual obligations efficiently and consistently, he noted.

REINSURANCE STRATEGY

The OIC emphasised the broader economic role of the insurance industry, describing insurance as a financial "shock absorber" for the country.

Under the reinsurance model, insurers distribute risks both domestically and internationally rather than retaining total exposure on their own balance sheets. In the event of severe catastrophes, overseas reinsurance payouts flow back into Thailand, injecting liquidity into the economy and accelerating recovery.

The OIC said this process helps transform large-scale disaster liabilities from a fiscal burden borne solely by the state into shared responsibilities across the private insurance and global reinsurance sectors.

Despite global economic uncertainty and rising operating costs, Thai insurers continue to benefit from robust reinsurance arrangements and improving investment returns, while life insurers reported stronger earnings supported by the adoption of new accounting standards, noted Mr Chuchatr.

DISASTER COVERAGE REVIEW

The regulator urged the public to review their insurance policies carefully to ensure adequate disaster protection, particularly for floods, earthquakes and windstorms.

The OIC warned many policies provide high fire insurance coverage, but only limited disaster sub-limits.

In some cases, a policy may offer fire coverage of 1 million baht while providing only 30,000 baht for disaster-related damage.

Consumers are advised to examine policy terms, coverage conditions and expiration dates carefully. Purchasing additional protection is recommended if existing coverage is insufficient relative to asset value or geographic risks.

The OIC also suggested policyholders renew essential policies during periods of economic slowdown, stressing that adequate insurance remains a crucial tool for financial protection and long-term economic resilience.

For policyholders facing claim disputes or rejected disaster claims, they can seek assistance from the OIC, which will help review policy conditions, coordinate with insurers and mediate disputes to ensure fair compensation procedures.