23 February 2009
The Insurance Commission has issued new notifications affecting the cradle-to-grave operation of branch offices of both life and non-life insurance companies.
The enactment of the Insurance Commission Act B.E. 2550 two years ago authorised the Insurance Commission, an independent commission under the Ministry of Finance, to act as regulator of the insurance industry in Thailand. The Insurance Commission replaced the Department of Insurance which used to operate under the auspices of the Ministry of Commerce.
Equipped with better resources and basking under the supervision of the Ministry of Finance, much was and is expected of the Insurance Commission.
To meet these expectations, the Insurance Commission recently issued the following Notifications aimed at protecting the public:
- Re: Standards, Procedures and Conditions in Applying for Permits for Opening of Branch, Relocation of Head Office or Branch Office, or Cancellation of Branch of Life Insurance Company B.E. 2551; and
- Re: Standards, Procedures and Conditions in Applying for Permits for Opening of Branch, Relocation of Head Office or Branch Office, or Cancellation of Branch of Casualty Insurance Company B.E. 2551.
These Notifications took effect on 15 January 2009, and supersede the existing notifications issued by the Ministry of Commerce covering the same matters.
Opening, Relocation of Branch Office
Most standards, procedures and conditions regarding permits for opening and relocation of head or branch office remain unchanged. That is, both life and non-life insurance companies must get a permit from the Insurance Commission prior to opening, and another permit before commencing operation of their branch office.
In addition, for a relocation of a head or branch office, an insurance company must submit an application to the Insurance Commission for approval at least 30 days prior to the relocation.
Cancellation of Branch Office
Regulations on cancelling a branch office of a non-life insurance company are the same under the old and new Notifications. However, rules cancelling a branch office of a life insurance company have been changed.
Under the new Notifications, any life insurance company that wishes to cancel its branch office is now required to seek approval from the Insurance Commission. The application for a branch office cancellation has to be submitted at least one month prior to the cancellation. The life insurance company must provide sufficient reasons to justify the cancellation. It must also specify the branch to which business will be transferred. The permits for the cancelled branch will also have to be returned to the Insurance Commission.
New permits are not required for those branch offices which already have permits. Those which filed their applications before the new Notifications came into force, and are awaiting the issuance of their permits need not re-file their applications with the Insurance Commission. For all intents and purposes, these applications shall be considered filed under the new Notifications.
The Insurance Commission may be lauded for passing the new Notifications which may be considered as good measures to protect the general public. The importance of consumer protection cannot be undermined especially in light of the past economic events. Through the new Notifications, the Insurance Commission will have a record of the operation of branch offices of insurance companies. A policy holder need not fear a branch office disappearing without a trace.
For further information, please contact: