The Office of Insurance Commission (OIC) is discussing with the Thai General Insurance Association (TGIA) tightening the interpretation framework for the conditions of Covid insurance contracts to protect consumers and prevent abuse of legal loopholes, said Suthiphon Thaveechaiyagarn, OIC's secretary-general.
Syn Mun Kong (SMK) cancelled the termination of the lump sum Covid 2-in-1 insurance on Sunday evening about two days after the company's announcement which drew huge criticism from customers and a strong reaction from the insurance regulator.
"We are rechecking the conditions of Covid insurance policies again to see whether there are any issues or wording which could put consumers at a disadvantage," said Mr Suthiphon.
"If there are any, the OIC will lay down a new interpretation framework so it can be mutually understood. The OIC, as a registrar, will interpret any problematic wordings to the consumers' advantage."
He said the new interpretation of the conditions will help the OIC protect consumers while it's waiting for the draft of new conditions of Covid insurance policies.
At the same time, it will help save operating costs for insurance companies while they are revising their insurance policies.
Mr Suthiphon said the case provides a worthy experience that shows the importance of consumer confidence, business trust and the necessity of fast decision-making and action-taking processes.
"If the OIC had not take legal action, the public may have used social sanctions. However, social sanctions will take time and not be enough to prevent damage that could occur to other insurance companies," he said.
He said the current amount of the Covid insurance policies with a lump-sum payment does not threaten the survival of insurance issuers. However, there are a few insurance companies that are 'sensitive' and may be affected by losses from the lump sum Covid-19 insurance policies.
The latest stress test showed that the industry can survive even in the most severe case in which GDP shrinks.
"Covid-19 insurance premiums were not expensive in the past because the risk was considered low at the time, However, based on new statistics, the premiums would be raised in line with higher risk in the future," he said.
A source from an insurance company who requested anonymity said if the termination plan has succeeded, SMK might have become the industry leader that caused other issuers to follow suit and consumers to lose trust in the insurance businesses.
In the case of SMK, the company's response is quite slow and the company should have take action before or at least at the same time as the regulator.
SMK is an insurance company with a strong financial capacity. Its stream of revenue is 72% contributed by car insurance products.
It may suffer some losses if the value of claims from Covid insurance increases but it will not cause the company to struggle.