By Sucheera Pinijparakarn
AIG Thailand Group aims for double-digit growth in its financial-insurance product line driven by directors and officers (D&O) liability policies due to the improvement in the economic environment and corporate-governance trends.
Financial insurance is part of the commercial line under New Hampshire Insurance Co. Commercial insurance contributes 60 per cent of premium income to AIG Thailand Group.
In 1999, New Hampshire Insurance became the first to introduce a D&O product for listed companies and multinationals. The company did not push this product after the US economic crisis in 2008, since the situation was unlikely to support D&O, Pan Rodloytuk, a senior vice president, said yesterday.
D&O is liability insurance payable to the directors and officers of a company for losses or advancement of defence costs in the event an insured suffers such a loss as a result of a legal action brought for alleged wrongful acts in their capacity as directors and officers.
The company will resume its aggressive focus on the product after seeing a change in the economic environment. The Asean Economic Community (AEC) is also encouraging companies to expand in the region.
Directors and officers make decisions in leading their companies to be successful both locally and abroad.
These decisions carry the risk of personal litigation and unlimited financial liability as a result of their consequences. Listed companies are also expected to embrace corporate governance, so D&O will become more important in covering risk to the directors of companies, Pan said.
New Hampshire has more than 100 corporate clients among the more than 500 listed companies, while the AEC is encouraging listed and non-listed companies to expand, so the door to D&O in the financial-insurance line of the company is opening widely. The company does not disclose the actual premium income of the financial line but he said it had reached hundreds of millions of baht.
“The renewal rate of above 90 per cent reflects acknowledgement by corporations of the importance of carrying D&O insurance. However, if we want double-digit growth for several years, we have to seek new customers, and listed companies are the focus,” he said.
Several Thai insurance companies have seen the potential as well as New Hampshire, making the competition in this segment more intense.
The picture of D&O claims has changed from employees taking directors to court for unfair treatment to customers or suppliers requesting regulators to take action against directors for wrongful management.