Regulator to bolster disaster risk management

Thailand's Office of the Insurance Commission (OIC) is moving forward with plans to enhance the nation's disaster risk management. This includes creating a national disaster playbook and establishing a proposed disaster insurance fund to mitigate the economic fallout from future catastrophes.

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As risks escalate, the insurance sector should play a critical role in absorbing large losses and reducing the burden on government finances during major disasters.

OIC secretary-general Chuchatr Pramoolpol highlighted that the initiative is a response to escalating climate-related risks, such as severe storms and earthquakes, which increasingly threaten households, businesses, and financial stability. He emphasized the insurance sector's crucial role in absorbing significant losses and alleviating the strain on government budgets during major disasters.

The OIC is currently studying the proposed disaster insurance fund with stakeholders. A preliminary framework is expected later this year, which will then be submitted to the OIC board before going to the Finance Ministry and seeking national approval. This fund is intended to function as a national risk management mechanism, capable of handling catastrophic losses that could overwhelm the government's emergency budget.

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The fund is designed to serve as a national risk management mechanism capable of handling catastrophic losses that could exceed the government's emergency budget capacity.

Under the proposed system, insurers would help cover damages through insurance and reinsurance, including risk transfers to global markets. The framework is initially expected to focus on large-scale disaster risks like earthquakes, floods, and windstorms, though the final scope is still under review. The OIC is also developing a comprehensive disaster playbook to improve coordination among insurers, regulators, and relevant agencies during emergencies, aiming to streamline claims handling and speed up payments to policyholders.

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Lessons from Thailand's catastrophic flood in 2011, when insurers were able to settle around 95% of retail claims within two months, indicate a clearer disaster response structure could improve public confidence.