In more detail

Issues of the amendments

Below are the key points of the drafts. We have covered the drafts in more detail in our newsletter published in July 2021, which can be found here.

1. Group A (elevating governance standards of insurers)

• Corporate governance
• The definition of directors will be amended to include executive committees of branches of foreign insurers.
• "Person having the authority to manage the company" will be subject to the same standard of care and obligations as directors of insurance companies. The definition is drafted in quite a broad manner.
• The appointment of directors and persons having the authority to manage insurance companies and their re-election to office requires prior approval from the OIC.
• This list of prohibited connected transactions will be expanded to include the leasing of property.
• Shareholding requirements
• Any persons (including their connected persons) holding, directly or indirectly, 5% or more shares of an insurance company must report to the OIC.
• In addition to the existing foreign/Thai shareholding requirements, a new regulatory approval of 10% shareholding will be introduced. Specifically, no one, together with their connected persons, can directly or indirectly hold more than 10% of the company's shares unless they have obtained the OIC's prior approval or comply with the sub-regulations to be issued by the OIC.
• Dividend payments
• The OIC will be empowered to issue sub-regulations on dividend payments of both life and non-life insurers.
• Products and distribution
• Any insurer may offer insurance against personal loss or damage that are relevant to their core products (either life or non-life), subject to the sub-regulations to be issued by the OIC.
• Directors, staff or employees of insurance companies can sell insurance without a license but will need to undergo training organized or endorsed by the OIC.
• Insurance companies will have the discretion to set premium rates for group insurance without having to seek approval from the OIC.
• Insurers will be permitted to underwrite foreign currency-based insurance.
• Insurers will be able to offer benefits other than those stipulated in the policy if they can satisfy the requirements under the sub-regulations to be issued by the OIC.
• Capital fund and finance
• Insurance companies will need to maintain a minimum capital fund as required in the sub-regulations to be prescribed by the OIC, possibly THB 1,000 million for non-life insurers and THB 5,000 million for life insurers.
• The OIC will impose certain sanctions if the insurance company's capital fund falls below the required amount.
• Others
• Outsourcing

Unlike the current Insurance Acts, which are silent on outsourcing, the drafts explicitly allow companies to outsource their functions under requirements of future sub-regulations.

• Auditors

Auditors must be those approved by both the Office of the Securities and Exchange Commission (SEC) and the OIC. They must report to the OIC if they suspect any corruption within the insurance company and be responsible for damage caused by their willful misconduct or gross negligence.

• Actuaries

The chapter on actuaries is amended in its entirety, including validity of actuarial license is for five years, instead of two years, and a company is required to employ or procure at least one full-time actuary (appointed actuary).

2. Group B (facilitating business transfers and amalgamations)

• Process of business transfer or amalgamation
• Novation of insurance policies in case of business transfer (i.e., the change of insurer)

The novation process will be simplified to only requiring the transferee (i.e., the new insurer) to notify the insureds via registered mail or other qualified electronic means, as opposed to obtaining express consent from the insured. If the insureds do not object to the novation within 30 days from the receipt of notice, the novation will become effective. If an insured objects, the contract will not be novated until the debts have been repaid or security has been provided for such debts.

• Ongoing litigation cases

In the event of a business transfer or amalgamation, the rights of the transferor or the amalgamating company as party in a court case will be subrogated to the transferee or the new company formed as a result of the amalgamation.

This principle also applies to partial business transfers.

• Additional offenses for directors and management officers
• Directors and persons with management authority of the company whose order (or omission to do so) causes the company to commit an offense relating to the management of its assets, conflicts of interest, or preparation of its register books, accounting books, financial statements or operational reports, will be liable.
• Directors, persons with management authority of the company, company employees, or persons assigned by the company who seek unlawful benefits or perform unlawful acts, such as fraud and embezzlement, that may affect the company, the insured or the public, will be liable.
• Instructing or supporting the auditor, actuary or loss adjuster to abuse their duties is unlawful.
• Giving false statements to the registrar or competent officials is an offense.
• Destroying or damaging the seal or mark that the registrar or competent officials has affixed is unlawful.

We will keep you posted on further developments. For more information and assistance, please contact our team.

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Contributors: Soravit Vongbunsin, Thitapa Haritaworn, Nop Kitcharoenkankul, Sirapop Amorncheewanun, Supachoke Mueanmai, and Padharit Nitisoravut.