Background and rationale
The Office of Insurance Commission (OIC) has issued Notifications re: Rules and Procedures for the Issuing and Offering for Sale of Insurance Products by Life and Non-Life Insurance Companies, and the Operations of Insurance Agents and Licensed Brokers (Notifications). The Notifications came into effect on 1 January 2019 and have replaced its previous drafts.
A substantial portion of the key concepts presented in the draft versions are retained in the Notifications. For further details, please see our June 2018 Client Alert.
The Notifications focus on good corporate governance, fair treatment of customers and places obligations on insurance companies to include certain procedures into their operations, including risk management and internal controls. Specifically, the Notifications cover the following:
Some key points under the Notifications include:
It is essential that insurers familiarize themselves with the new requirements, in order to ensure compliance with the more stringent measures. The OIC has the authority to order any insurance company acting in breach of the Notifications to immediately rectify its actions if the company unintentionally acts in breach of the Notifications and the breach can be rectified. If the company does not rectify its actions without an appropriate reason or intentionally acts in breach of the Notifications, the OIC may order the company to halt certain operations. The same penalty applies to agents, brokers, and banks, as their licenses could be revoked. In addition, the OIC has the authority to enforce legal sanctions as stipulated in the Life Insurance Act B.E. 2535 (1992) and the Non-Life Insurance Act B.E. 2535 (1992).