The Office of the Insurance Commission (OIC) has ordered Asia Insurance 1950 to temporarily stop signing up new customers from Sept 23 after a probe suggested the company has insufficient liquidity for claim payments and a lower capital adequacy ratio than the legal requirement.
The office also asked the company to ensure it made claims payments to policyholders on time, as well as prohibiting the company from transferring assets.
The previous week, the OIC issued several measures to support insurance companies facing liquidity problems due to the huge increase in claims for Covid insurance.
OIC secretary-general Suthiphon Thaveechaiyagarn said the office found Asia Insurance’s financial status is unstable, with more liabilities than assets and a lower capital adequacy ratio than prescribed by law.
The company may not be able to repay its debts in accordance with its obligations to the insured or the public, as it reportedly has insufficient liquidity to pay claims, he said.
According to the statement from the OIC, Asia Insurance’s late reimbursement of compensation is considered a violation or non-compliance with the Commerce Ministry’s rules regarding the payment of compensation or the return of insurance premiums by non-life insurance companies.
The company also has a lot of accrued claims that affect its financial position and operations, said the regulator.
In addition to the suspension of insurance sales and transfer of assets, the OIC ordered the company to take measures to fix its financial and operational problems.
Asia Insurance must increase capital and raise its capital adequacy ratio to meet the levels required by law within 30 days from the date of the order, as well as provide a progress report every seven days.
The office also asked the company to prepare a summary report compiling all details regarding its insurance policies.
To ensure transparency, Asia Insurance is expected to compile a complete and up-to-date list of existing claims, and accelerate the payment of compensation in accordance with conditions prescribed in the contracts.
According to Asia Insurance’s financial statements disclosed to the public as of June 30, the company had a cash reserve of 685 million baht, total income of 491 million and total assets of 4.87 billion.
Its direct insurance claims stood at 721 million baht, with accumulated losses of 285 million and total liabilities of 4.4 billion.
According to Mr Suthiphon, the OIC will keep monitoring and inspecting insurance companies and immediately take legal action if wrongdoing or a breach of consumer rights is detected.
The public need not panic because the OIC is working to ensure policyholders will receive compensation on time and the industry as a whole is free of systemic risks, he said.Internet Explorer Channel Network