Thailand is likely to have a permanent Nat CAT Fund for the country soon. The initiative is being backed by the Thai General Insurance Association (TGAI) according to a report published in the daily the Bangkok Post.
The Fund is expected to be in place in the first half of 2026. TGAI is currently exploring the possibility to use CAT bonds as a form of reinsurance capital to help support the proposed Fund.
The proposed Nat CAT Fund with an initial capital of THB50bn ($1.6bn) is expected to enhance long-term risk management within the industry. Thailand experiences increasingly frequent and severe natural disasters events. The fund will be financed through insurance premiums, a catastrophe bond fund and reinsurance.
The report quotes TGAI president Somporn Suebthawilkul saying that complete implementation of the Fund is likely by 2027. The fund that will be entirely for the domestic industry, could potentially interact with or leverage international capital markets, including catastrophe bonds, in the future.
Thailand has begun to transition from being a low-risk country for natural disaster events, to experiencing considerably increased risks of catastrophe. Thailand had set up a temporary fund after the 2011 catastrophic floods that caused significant strains on capital adequacy of the industry, hence, having additional sources of capital is prudent as natural disasters are occurring more frequently and with greater severity, making long-term risk preparedness essential for the non-life insurance industry.