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OFFICE OF INSURANCE COMMISSION
Thailand

The Problem

Prior to its transformation, The Office of Insurance Commission, initially the Department of Insurance (DOI) was a government body under the control of the Ministry of Commerce. The Office took charges on supervising and promoting the development of business conducts of insurance companies, supervised the quality, knowledge and operation of agents and brokers of both natural and juristic persons and covered insured persons and beneficiaries in accordance with the insurance contract to obtain the complete benefits promptly from the insurance system. When operated as a governement body, the DOI was faced with two main problems, which initiated the need for transformation of the Department into an autonomous insurance regulatory authority.

The first problem DOI encountered was political interference. The Minister and the Deputy-Minister of Commerce are politicians, thus, being under the control of the Ministry of Commerce, DOI would be politically dependent and accountable in the exercise of its functions and powers. The second problem had to do with DOI’s limited financial resources. The Royal Thai Government financed a yearly fiscal budget to the DOI for supervising the Thai insurance industry. Therefore, with insufficient budget, DOI was unable to neither attract and retain highly skilled staffs nor conduct effective insurance supervisions and promotion, not to mention inadequate supervisory infrastructure and tools.

Solution and Key Benefits

 What is the initiative about? (the solution)
The Office of Insurance Commission (OIC) was transformed from Department of Insurance into an autonomous regulatory authority on September 1, 2007 by the Insurance Commission Act B.E. 2550 (2007). OIC functions as an insurance supervisory agency in Thailand, regulating and supervising all licensed insurance companies and insurance intermediaries in Thailand, with its primary mandate being to safeguard policyholders from undue loss. This transformation has largely benefited the insurance businesses and the insured in Thailand.

After the transformation, OIC can now manage its own budget, lessening government budget burden. OIC now receives its income from collecting levies on insurance premium from insurance companies under its supervision. As a result, OIC can manage its middle term and long term plans to supervise, promote, and develop insurance businesses more efficiently and appropriately. In addition, OIC now has sufficient budget to attract and hire more highly skilled staffs, especially in specialized areas of insurance supervision, actuary, and law.

OIC is now able to provide higher quality services to the public. There are currently many e-services provided to the public on OIC website (www.oic.or.th). On-line services in the form of downloads, such as the complaint form, the financial/annual reports, the agents/brokers application form, on-line checking for insurance agents/brokers examination results, the table for calculating motor insurance premiums, and the application form for seminars/workshops provided by OIC. The insurance data and related information, such as the insurance intermediaries licensing procedures, the insurance products being sold in the market, the new insurance supervisory methods/frameworks, and the new laws/regulations, are also available on-line. OIC also encourages the public’s participation by facilitating an on-line OIC web board where people can send in complaints and suggestions for better improvement of the OIC services as well as the insurance businessess.

As part of this transformation, OIC also underwent organizational restructuring as well as improved the rules and regulations in order to conform to the financial situation and the changing insurance industry. Consequently, the effectiveness and flexibility of the insurance supervisory system has improved significantly. The OIC has introduced many new concepts that are beneficial to the insurance development. For instance, OIC established the Supervision Planning and Development Department. Its duties are to plan and develop the approaches on supervising insurance businesses, such as introducing risk-based capital approach. The approach is widely used by insurance supervisors around the world. The concept is used for ensuring that the capital positions of individual insurers are at the levels that commensurate with their risk profile so that they can pay claims as promised in every insurance policy which are sold. In the past, there was a workload for the staffs, thus they could not perform their functions efficiently. After the seperation, our staffs can concentrate on their jobs and can generate more efficiency on the supervision of insurance companies. Moreover, OIC established educational programs with the objectives of educating the public and the youth on insurance awareness and insurance information. For exmaple, the “Insurance for the Youth” programe distributes educational medias to schools around Thailand.

The transformation also brings about more transparaency. The information on OIC procurements and auctions are also presented on-line. Not to mention OIC’s consultation process with the industry, this includes a public hearing of draft laws/regulations before the enactment.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
Mrs. Chantra Purnariksha, the current Secretary – General of the Office of Insurance Commission (OIC) proposed the solution to transform the Department of Insurance into the Office of Insurance Commission to the Thai parliament. The proposal was later approved, which led to the establishment of the Office of Insurance Commission on September 1st, 2007. OIC’s stakesholders comprise of the private insurance sector and the public sector. The private insurance sector includes 98 insurance companies, which are divided into 24 life insurance copanies, 67 non-life insurance companies, 5 health insurance companies, and 2 reinsurance companies. Out of this number, one is a foreign branch of a life insurance company and five are foreign branches of non-life insurance companies. The private insurance sector also consists of 360,562 insurance agents, 42,320 individual brokers and 646 juristic brokers. The public sector refers to the beneficiary and the public as the whole.

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The Insurance Core Principles (ICPs), particularly ICP3 was studied and adapted to be implemented in the organizational restructure of the Department of Insurance. The Insurance Core Principles are the standard for insurance supervisory practices used worldwide and are determined by the International Association of Insurance Supervisors (IAIS).

In addition, DOI constantly conducted regular meetings with the private insurance sector, which enabled DOI to be informed of the problems, suggestions, and additional inputs from the private sector. The information obtained from the private sector was also taken into consideration while undergoing the transformation.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
The Department of Insurance made preparations and conducted studies on the transformation and benefits that would be gained from it. DOI took the first step in forming a working team for this mission. The first team consisted of DOI’s executives and officers. The team took initiative in hiring a famous educational institution in Thailand to conduct studies by using the organizational structure of international organizations as case studies. Futhermore, interviews with insurance companies and questionnaires were conducted as part of the study.
Eventually, the second working team was formed to perform additional studies on the same issues by using the reports of the previous studies conducted by the first team. A public hearing was conducted upon completion of their studies. Representatives from the government, private, and public sectors as well as relevant experts were invited to the hearing in order to be informed of the outcome of the studies and provide suggestions for further improvement.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
Before the trasformation could be implemented, the plan must first be proposed to the Thai congress for approval. This stage of the transformation process was considered the main obstacle for DOI. The DOI executives must inform and persuade relevant governmental organizations, law makers, governors, and the private insurance sector, of the standard insurance supervisory practices and the benefits gained by relevant parties of transforming DOI into an autonomous regulatory authority so to win the approval of the congress.

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The initiative originated several years ago during 2000-2001 when DOI received financial and technical assistance from the World Bank for conducting the research on strengthening insurance supervision in Thailand. DOI later allocated its budget for outsourcing famous educational institutions to conduct studies on the issue. DOI’s working team is responsible for overseeing the study, which was conducted over a period of 6-12 months.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
Yes, the transformation has postively affected the society and the economy of Thailand. The Thai people have also benefited from this change. When the organization is more flexible and has a more effective management system, the people ultimately receives faster and more efficient services from OIC, for instance, OIC can response to customers’ compliants more quickly. In addition, OIC has a policy to create more awareness and knowledge of insurance to Thai people through the internet, road shows, brochures, radio, and television. As a result, the people will have the knowledge to protect themselves as well as access to fast, accurate, and just services from OIC.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
There are both internal and external impacts from the transformation. Internally, the operational system is more flexible and the work management is more efficient. Externally, the insurance regulatory authority in Thailand has a unity. Thailand has an organization that’s one of the main foundations, which can help promote and strengthen the economy. The financial and investment markets are also receiving more funding support leading to better social and economical developments of the country.

The lessen learned from this transformation is that effective management requires preparations starting from the planning process til the evaluation process in order to improve the work efficiency and the services provided to the people. OIC has created OIC web board and poll on our website where people can leave suggestions or comments that may be used to improve our services. Furthermore, the knowledge and ability of the team members are vital to the accomplishment of any task. The team members must possess a sense of unity and the skills to brainstorm and express their opinions while respecting other stakeholders’ opinions for the highest benefit of the organization and the country.

Contact Information

Institution Name:   OFFICE OF INSURANCE COMMISSION
Institution Type:   Public Agency  
Contact Person:   MRS. CHANTRA PURNARIKSHA
Title:   SECRETARY-GENERAL  
Telephone/ Fax:   662 547 4988
Institution's / Project's Website:   662 547 4571
E-mail:   oic_thailand@oic.or.th  
Address:   44/100 NONTHABURI 1 ROAD
Postal Code:   11000
City:   NONTHABURI
State/Province:   NONTHABURI
Country:   Thailand

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