The government of Thailand is looking to establish what would be the largest excess-of-loss property-catastrophe treaty in the world—a catastrophe fund equipped to cover losses of up to $16.2 billion.
A briefing from insurance-rating agency A.M. Best Co. says the Thai government is attempting to keep flood insurance available and affordable in the wake of four months of flooding in 2011 that “delivered a shocking and unexpected blow to the global insurance industry in the form of an unmodeled event.”
The catastrophe fund is “expected to be criticized because of Thailand's small reinsurance premium base, but it is a step in the right direction to restore confidence in the Thai market,” A.M. Best says.
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