The insurance sector in Thailand will see further liberalisation, based on drafts of proposed new insurance laws published by the Office of Insurance Commission (OIC) earlier this year, Ms Sarah Chen, Of Counsel at Norton Rose Fulbright in Bangkok, told Asia Insurance Review.
However, the further relaxation of rules for foreign participants will be accompanied by tighter regulatory control of insurers, more liabilities imposed on directors and more flexible capital control for the OIC. There will be an easier process for portfolio transfers, though.
The proposed changes include:
• Two additional categories of licensees: (i) a Thai public limited company with at least 95% of its shares held by a foreign insurer; and (ii) any other form of entity, such as a mutual society.
• New foreign shareholding limit of less than 50%, up from the existing 25% threshold. Specific regulatory approval would still be required for foreign shareholding of 50% or more.
• Insurers licensed in a country recognised under a bilateral treaty with Thailand, can issue insurance policies in Thailand.
• Policyholders who do not object to the proposed transfer of their policies within the prescribed period are deemed to have consented to the transfer.
• New reporting requirements for: (i) any share acquisition of 5% or more; and (ii) any change of constitutional documents, directors or management personnel.
• Prior OIC approval required for: (i) any single shareholding of more than 10%; and (ii) any appointment of director or management personnel.
• The OIC has the flexibility to set the level of Capital Adequacy Ratio. Consequences of a breach are: (i) requirement to submit a remediation plan; (ii) suspension of operations; and (iii) revocation of licence.
• Criminal penalties for violation of certain provisions of the Insurance Act extended beyond directors and responsible persons to include management personnel.
• Directors liable for any damage from violation of the law, unless the director did not take part in the violation.
• Directors liable for any damage from violation of general fiduciary duties, unless, in making any decision, the director: (i) had considered sufficient facts; (ii) acted in good faith; (iii) acted for the benefit of the insurer; and (iv) acted without any conflict of interests.