The Office of the Insurance Commission (OIC) says Southeast Insurance has not been approved for liquidation, stressing that all coverage for policyholders is still in place.
The swift clarification from the OIC followed a statement by the insurance giant to the authorities that it planned to cease operations.
Thai Group Holdings Plc, a holding company that owns Southeast Insurance, submitted an open letter notifying the public of the board of directors' decision to terminate its non-life insurance business on Jan 26 through the Stock Exchange of Thailand's electronic platform.
In response to the news, the OIC issued a statement on Thursday to clarify that according to Section 57 of the Non-Life Insurance Act, any non-life insurance company wishing to cease its business must submit a request to the registrar to protect the interests of the policyholders and other stakeholders.
Although Southeast Insurance has filed a request with the OIC, the registrar issued a statement saying it has not yet granted permission to the company, meaning its closure is not yet legally effective.
According to the statement, the OIC said Southeast Insurance's board of directors is mandated to prescribe rules, procedures and conditions regarding the company's reimbursement of refunds and compensation before the board approves the dissolution of its business.
The guidelines for reimbursement must clarify the following issues: how the company will manage or transfer existing insurance policies with a binding effect; provide notice to policyholders and stakeholders of their legal rights; manage its capital reserve and assets; and how much time the execution of such actions requires in order to be completed.
The dissolution of the company shall be effective from the date of authorisation and then it can be liquidated, the OIC stated.
The regulator asked the public to remain calm and rest assured Southeast Insurance cannot arbitrarily close its business or terminate their policies without approval from the OIC.
The OIC also set up a team of officers from the business and investment compliance, auditing, and insurance business analysis divisions to closely oversee the process and ensure the benefits of insured beneficiaries under policies and other stakeholders are fully protected, according to the statement.
In response to the OIC's statement, Southeast Insurance released a statement reiterating the company has enough liquidity to pay claims to all customers and business partners.
The company said the decision to terminate its non-life insurance business and return the business licence to the OIC was the best solution it could generate in order to contain the damage for all stakeholders.
This matter is scheduled for consideration at the OIC board meeting today, according to the statement.