The Office of the Insurance Commission, Thailand’s insurance regulator, has published an updated draft of rules governing the sales of life and non-life insurance products, seeking to replace its outdated predecessors.
The draft aims to prioritise and protect consumers in all aspects of the insurance business by stressing concepts such as good corporate governance and fair treatment of customers, according to Sumet Orsirivikorn, a partner in the corporate & commercial and mergers & acquisitions practice groups at law firm Baker McKenzie in Bangkok.
One of the measures introduced in the draft rules requires the directors and management of insurers to promoting standards of fair treatment to customers. It also requires the company to incorporate this corporate culture into all its business operations.
“This draft regulation requires insurance companies to have in place a written plan and working committee specifically relating to the sale and marketing of insurance products,” Orsirivikorn told c “In addition, it removes an ambiguity over whether a bank can conduct telesales which was silent in the previous regulation.”
Furthermore, the draft acknowledges electronic platforms, which previous regulations did not mention, as a channel for insurance policy sales. This provision will allow the OIC to craft regulations governing online distribution, which has become more common in recent times. It also includes a section on after-sales services, which ensures a standard system for receiving complaints from customers, cancelling insurance policies, and properly returning the customer’s paid premiums.
In order to protect consumers, the OIC will retain its authority to order any company violating the rules to correct its actions as well as suspend the company’s operations when needed. The maximum penalty for any violation is the revocation of the concerned entity’s insurance licence.
According to Orsirivikorn, the new draft guideline will affect the Thai insurance industry in the following three ways: “internal functions of insurers will be required to comply with more stringent sale-related requirements; insurers will need to make sure that their distribution channels comply with this regulation; and customers will have better information and treatment.”
