Thailand’s insurance regulator has ordered Asia Insurance 1950 to stop accepting new customers due to liquidity concerns.
The order by the Office of the Insurance Commission (OIC) took effect on Sept. 23, the Bangkok Post reported. The regulator acted on the results of a probe, which suggested that Asia Insurance’s liquidity was insufficient to pay out claims and that its capital adequacy ratio was below the legally mandated threshold.
OIC also prohibited the company from transferring any of its assets and warned that it must complete its payouts to policyholders on time.
OIC secretary-general Suthiphon Thaveechaiyagarn said Asia Insurance’s financial status is unstable, with more liabilities than assets. He said that the company’s insufficient liquidity may prevent it from meeting its obligations.
A huge increase in claims caused by the COVID-19 pandemic has caused several insurance firms to encounter liquidity problems. Several weeks ago, OIC responded by issuing several support measures for the companies.
To remedy the problem, OIC ordered Asia Insurance to raise capital to meet the capital adequacy requirement within 30 days, with a progress report due every seven days. The company must also prepare a summary report covering its entire insurance product offering and existing claims.
Asia Insurance’s most recent financial statement, dated June 30, said that it had cash reserves of THB685 million (SG$27.45 million), total income of THB491 million and total assets of THB4.87 billion. Direct insurance claims totalled THB721 million, with accumulated losses at THB 285 million and liabilities at THB4.4 billion.
The regulator reminded the industry that late compensation of policyholders is a violation of the rules set by the Commerce Ministry regarding non-life insurance companies. Suthiphon said OIC will continue monitoring the market and will immediately take legal action in the event of violations.