TGIA presses its case for national reinsurance fund 

 
Anon Vangvasu, president of the TGIA, said yesterday that the fund would increase bargaining power for local insurers with international reinsurance firms, while the government would have the same information as local insurance companies if it wanted them to underwrite social-welfare protection schemes.
Normally, local insurance businesses have to transfer a portion of their liabilities to international reinsurers if they feel they cannot retain all the risk.
The government is planning to transfer its civil servants’ medical-benefits scheme to insurance companies in order to achieve better cost management, given that payments under the scheme exceed the budgeted level every year. However, if local insurers run the scheme, they would have to transfer a portion of the liability to international reinsurers, Anon said.
 Informal talks with the reinsurers have showed they are worried the high level of claims, as the payment mechanism is unlimited for both outpatient and inpatient services, he added.

Questions raised 
With the number of claims from civil servants so far this year standing at 2.94 million, foreign reinsurance firms have questioned the claims operating system and want to see a more efficient and cost-effective system, the association chief explained.
The government currently has a fiscal budget of Bt60 billion for the civil servants’ medical-service scheme, but the actual payments made exceed the budgeted amount every year, he said.
As of end-September – the close of the last fiscal year – some Bt71 billion had been paid out, with the figure expected to rise to Bt75 billion in the current fiscal year, he added.
Moreover, medical payments under the scheme could climb to Bt160 billion annually in the next 10 years, in line with the ageing society and a lower rate of new government employees, he warned.
If the government decided to set up a national reinsurance fund, local insurers could retain liability at 20 per cent, transfer a further 20-25 per cent to the fund, with the remainder going to international reinsurers, he said, adding that bargaining power would be controlled by the domestic market.
“The minister has paid attention to the idea, as it would help make liability underwriting stronger and the government would have the same insurance information as the operators have,” he explained. He said the size of fund should be Bt50 billion but, if it were also to cover natural disasters such as the massive flooding of five years ago, the amount should be Bt100 billion.
Whether or not the fund comes into existence, the TGIA is looking forward to helping the country manage the cost of medical insurance claims by civil servants, as it has already been successful in bringing down the cost of compulsory motor insurance, Anon said.
Compulsory motor insurance now costs Bt600 for coverage of Bt300,000, compared to an annual premium of Bt1,200 and coverage worth just Bt50,000 in the past.
Anon said the association had set up three subcommittees – to oversee the policy for health insurance, setting underwriting and premium rates, and compensation services – as part of its preparations to manage the healthcare benefits for civil servants and their dependants.
The TGIA has also been in talks with software houses about IT management solutions to serve claims under the scheme.
A national reinsurance fund would form an important part of the mechanism to make the underwriting of the insurance scheme efficient, while it could also be used to subsidise other social-welfare schemes of the government, such as crop insurance and paying out in the event of a natural disaster, the president said.