KUALA LUMPUR, March 7 (Bernama) -- Operating losses relating to medical insurance products covering COVID-19 infections have put considerable strain on the operating performance and balance sheets of several Thailand insurers, according to a new AM Best commentary.
In its Best’s Commentary, titled ‘COVID-19 Claims Put Thailand Insurers Under Pressure’, AM Best notes that according to the Thailand General Insurance Association (TGIA), most of the COVID-19 claims in the country have come from a short-term policy that pays a sizeable lump sum when a policyholder contracts COVID-19.
This payment is fixed and does not relate to medical costs incurred by the policyholder. Although the market stopped writing these policies in June 2021, a high volume of risks remains in force through the first half of 2022.
Total losses in 2021 related to the lump-sum policies have been estimated at THB 34 billion (US$1.1 billion), or approximately 19 per cent of the capital and surplus of the industry as of September 2021. (US$1 = RM4.177)
According to a statement, the mounting claims have forced four companies to cease operating, and more recently, Thai Insurance and Southeast Insurance—one of the country’s top 10 insurers—applied for regulatory approval to be liquidated in early 2022.
“Some insurers have managed to mitigate COVID-19 exposures through reinsurance; however, the lump-sum policies have had a severe negative impact on the industry and pushed it to an underwriting loss,” said Trung Tran, senior financial analyst, AM Best.
Global credit rating agency, AM Best which is United States-headquartered, expects COVID-19 claims to continue placing pressure on the credit quality of the Thailand insurers that are exposed to the lump-sum policies. Companies with strong balance sheets and other profitable insurance and investment activities are better insulated against these losses.
For more information, visit www.ambest.com.
-- BERNAMA
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