Earthquake Insurance Expected to Soar Following the Destruction in Bangkok
Bangkok – Following the recent powerful earthquake that struck several parts of Thailand, including Bangkok, the insurance industry is gearing up to reassess its approach to natural disaster coverage. Insurers are now set to discontinue free earthquake coverage and are considering restructuring policies to reflect the increasing risk.
The Thai General Insurance Association (TGIA) has indicated that earthquake insurance is likely to be separated from fire insurance policies, a shift from previous practices where disaster coverage was often bundled to attract customers. In addition, premiums for disaster-related policies are expected to rise, along with an increase in deductible rates to align with the heightened risk.
Previously, insurance companies commonly bundled earthquake and flood coverage with fire insurance for residential and commercial buildings to boost policy sales. However, the recent earthquake has demonstrated that such disasters are no longer rare occurrences but significant threats requiring specialized insurance solutions.
Insurers are now considering standalone earthquake insurance policies, stricter underwriting processes for high-risk areas, and adjustments to deductible rates. For instance, some structural insurance policies currently have a 20% deductible, which may be increased to 30% depending on risk assessments.
The collapse of the Office of the Auditor General’s under-construction building has further underscored the importance of robust disaster insurance. The project’s Contractor All Risk (CAR) insurance, valued at 2.24 billion baht, is shared among four non-life insurance providers to ensure financial stability in handling claims.
Thai Insurance Sector Faces Billion-Baht Losses After Earthquake-Induced Building Collapse