The Office of the Insurance Commission (OIC) has won a court ruling against Syn Mun Kong Insurance Plc (SMK), which filed a lawsuit claiming 40 billion baht in damages.
According to an OIC statement, the Central Administrative Court on Tuesday ruled in favour of the regulator in a case involving Covid-19 policies.
The regulator prohibited the termination of Covid policies unless there was clear evidence presented to the company that the insured had committed fraud or deception to benefit themselves or others from the insurance.
SMK, which sold more than 1 million Covid-19 "Find, Pay, End" policies (Covid 2-in-1), sent notices to its customers attempting to terminate the contracts because of the pandemic's impact.
This caused panic among policyholders during a critical period and among other insured parties about potential policy cancellations, according to the OIC.
The public backlash against the insurance industry was intense, necessitating urgent action to prevent escalation.
If SMK had succeeded in cancelling the policies, it could have set a precedent for other insurers to follow suit, potentially affecting all Covid-19 insurance policyholders.
As the regulatory body for the industry, the OIC's role includes protecting the rights and benefits of policyholders.
The regulator exercised its authority to issue the order to safeguard the interests of 16 million Covid-19 policyholders, ensuring coverage worth nearly 100 billion baht continued until policy expiration.
The OIC also recognised that allowing the termination of Covid-19 insurance policies during a severe outbreak, when the public could not obtain new Covid-19 insurance, would enable insurers to unfairly exploit their rights and take advantage of the public.
If people knew their policies could be cancelled during a crisis, no one would ever purchase insurance, said the regulator.
The OIC said the court's ruling was crucial. If the regulator had lost, it may have set a new standard allowing insurers to cancel other types of policies if large payouts were anticipated, an unprecedented scenario in the global insurance industry that would undermine public confidence in the system, according to the OIC's statement.
