Insurance Coverage for Flood Damage


Typical residential property insurance policies in Thailand do not include flood damage coverage. Although some policies include cover for damage caused by water leakage in their standard product packages, generally those packages specifically exclude flood damage coverage.


In standard risk situations, however, insurance companies in Thailand have generally offered residential property flood damage coverage for an additional premium, with a standard clause for flood damage coverage applying to all property insurance policies if the parties agree to the additional coverage, but Thailand’s Office of the Insurance Commission (OIC) reported on its website in October 2011 that insurance companies will stop providing new insurance with flood damage coverage until the current flooding crisis is resolved.


Commercial operations in Thailand – especially in the industrial sector – are more likely to have insurance coverage for flood damage than households. The Secretary-General of the OIC, Jantra Booranaroek, recently estimated that around 80% of businesses in the seven industrial estates that have flooded so far are insured against flood damage.


The OIC reported to the Cabinet on 1 November 2011 that the total value of property insured against flooding was Baht 745,353 million (which can be divided into Baht 688,926 million from an industrial sector and Baht 56,427 million from a residential sector) and estimated the damage covered by insurance at Baht 217,000 million (Baht 200,000 million from an industrial sector and Baht 17,000 million from a residential sector) or around 30% of the flood-insured sum.


While the OIC believes that insurance companies will not be seriously affected by the flood crisis, noting that some 85% of the insured sum is re-insured abroad, the Finance Minister, Thirachai Phuvanatnaranubala, has expressed a less optimistic view. On 3 November 2011, the Bangkok Post reported him stating that insurance companies have yet not begun a comprehensive assessment of flood losses, and global insurers who offer reinsurance for policies written in Thailand will want reassurances that a comprehensive flood management programme will be put in place to help mitigate losses from any future floods.