In January 2019, the Thai Cabinet agreed to propose the Marine Insurance Bill, as prepared by the Ministry of Finance, to the National Legislative Assembly for consideration. When the bill has been passed by both the House of Representatives and the Senate it will be passed to the monarch to be signed into law, and then published in the Government Gazette before coming into force.
Thailand does not currently have specific laws governing marine insurance, and the market therefore commonly adopts or refers to English law as the governing law for marine policies. This bill, once enacted, will be used to govern marine insurance in Thailand, and it therefore sets out specific terms in relation to marine insurance (that could also be used for insurance on other modes of transportation if specifically agreed by relevant parties).
The key points introduced in the bill are as follows:
- Definitions of fundamental terms in relation to marine insurance, and the enforceability of marine insurance contracts in the transportation of goods by sea within Thailand and internationally.
- The rights and duties of the insurer and the insured, including, inter alia:
- duties of the insured in presenting risks and disclosing information in the case of commercial marine insurance contracts;
- rights of the insurer in proving that the insured did not comply with their duty in presenting the risks for non-commercial marine insurance contracts; and,
- rights of the insurer when the insured acts fraudulently.
- Specifications of content that must be shown in the marine insurance policy, e.g., signatures and seals, including the ability of the insured to amend the representation before any damage is incurred.
- The method of calculating the insurable value of the ship, freight, goods, and other insured objects, as well as specific definitions and criteria relating to insurable interest in marine insurance.
- The criteria to be met for damages that will be covered by marine insurance—and damages that will not be covered, such as willful misconduct by the assured and loss caused by delay—including definitions of total loss and partial loss.
- The principles and duties for premium payment.
- The method of calculating the insured’s entitlement to compensation where the insured object is subject to total loss or partial loss, and the compensation method in the event of double insurance.
- The prescription period for a compensation claim under a direct insurance contract and a reinsurance contract (set at two and six years respectively in the current draft).
Once enacted into law, the new regulations would improve the economic potential of the Thai marine insurance and transportation industries, strengthening the ability of companies in those sectors to compete internationally.