The Office of the Insurance Commission (OIC) has issued notifications applicable to life and non-life insurance companies, which are intended to emphasize the importance of internal risk management in insurance companies. The notifications were published in the Government Gazette on September 1, 2017, and will take effect 180 days later on February 28, 2018.
The notifications contain several requirements that life and non-life insurance companies must comply with:
A Risk Management Committee (RC) must be established, with at least one member being a director, and the others being company executives or qualified persons with an understanding of enterprise risks. The RC will be required to convene and provide a report to the board of directors quarterly. Foreign insurers in Thailand may satisfy this requirement by utilizing an RC established at their company headquarters or regional office.
A risk management function must be set up to manage and monitor enterprise risks and produce status reports on all risks to the company.
A risk officer (i.e., the head of the risk management function) must be appointed. The company must report the appointment or withdrawal of the risk officer to the OIC within 30 days.
A risk management framework and policy, and three-year business plan, must be submitted to the OIC annually. Potential risks arising from the business plan, and the top ten recorded risks to the company, must be mentioned in these documents.
An internal audit department must be assigned to monitor and assess the company’s compliance with its risk management framework and policy, and report assessment results to an audit committee or the board of directors at least annually.
The company must inform employees about the objectives and benefits of risk management, and provide training sessions to employees to integrate a risk management culture into everyday business operations.
It is important to note that the OIC may require any specific insurance company (or the entire industry) to perform “stress tests” on a case-by-case basis.