The secretary-general of Thailand's insurance regulator, the Office of Insurance Commission (OIC), indicated that it has found many non-life insurance brokers providing credit to their customers to purchase insurance policies.
The mode of operations of the insurance brokers involved include:
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Paying insurance premiums to non-life insurance companies in the name of the insured, and
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Making agreements or contracts with the insured for the payment of premiums in instalments.
If the insured does not pay the premiums within the specified period, the broker will exercise the right to cancel the policy in the insured’s name and be the recipient of the premium refund from the insurance company.
According to OIC secretary-general Chuchat Pramulpol, such an agreement or contract is the nature of providing credit, which is not a legal duty of the insurance broker. Rather, he noted that it was a ready-made contract with pre-stipulated conditions that the debtor or the insured must give the authority to exercise the right to cancel the insurance policy to the creditor or the insurance broker.
He said that this is a separate agreement or contract from the insurance contract, and the insured cannot negotiate or conduct negotiations before entering into the agreement or contract, even though it is stipulated that the insurance broker must receive confirmation of the cancellation from the policyholder.
Such conditions may not allow the insured to consider carefully or receive clear confirmation. In addition, there is no provision for fair treatment of the insured in the event that the policyholder does not confirm the cancellation of such agreement or contract.
Therefore, it may cause the insured to be disadvantaged beyond what is appropriate, which may be considered an unfair contractual term and prohibited by law, which cannot be specified in the agreement or contract.
“The OIC would like to warn that if it is found that a non-life insurance broker has specified such conditions in the agreement or loan contract and relies on such conditions to cancel the plan, and the company eventually terminates the coverage under the policy, including returning the premium to the broker, such action causes damage to the insured and is a punishable offense,” said Mr Pramulpol.
“Non-life insurance brokers who commit such offenses may have their licenses revoked under the Non-life Insurance Act. They are also considered to have behaved in a manner that is a conflict of interest in the performance of their duties as a representative of the insured.”
Mr Pramulpol also said, “Importantly, the non-life insurance company must continue to provide coverage until the expiration of the insurance policy. The OIC has requested cooperation from the Thai General Insurance Association to inform its member companies that are insurance brokers who are contracting parties.”