sector 1: organization · 2 sections: farmers pay 60 baht/rai and the government pays 69.47...

ANNUAL REPORT 2012 1

ANNUAL REPORT 20122

Sector 1: ORGANIZATION


VISION To be a continuously developing organization that ensures the insurance system will serve

as a mechanism in providing stability to the people and in preparing for challenges in the future.

MISSION 1.Tobuildconfidenceandaccessibilitiesoftheinsurancesystem

2. To strengthen the capacity of the insurance system

3. To develop laws and policyholders protection system

4. To promote the infrastructure of the insurance system

ROLES AND FUNCTIONS OF THE OIC

Under this Act, the structure for the supervision of the insurance business is comprised as follows: 1.1 The Insurance Commission is responsible for the formulation of relevant policies as well for the promotion and development of the insurance business. The Commission is comprised of:

Mr. Bhoocha-oom holds a doctorate degree in Financefrom the University of Mississippi, USA, with extensive knowledge and experience in the financial and fiscalmanagement. Prior to his appointment as the Finance Permanent Secretary, he used to head various departmentsunder the Ministry of Finance such as the Director-Generalof the Excise Department and Director of the State Enterprise Policy Office (SEPO). At present he holdsan executive position in various organizations i.e. Chairman of the Government Housing Bank and Board member of the Thai Airways International PCL.

Mrs. Wimuktayont obtained her masters degree inBusiness Administration from the National Institute ofDevelopment Administration (NIDA), with extensiveknowledge and expertise in Accounting, Business Administration and Law. Prior to her appointment as Commerce Permanent Secretary, she has held importantpositions in the ministry namely Director-General of the Department of Internal Trade, Inspector-General, Deputy Director-General of the Department of Internal TradeandtheDirectoroftheOfficeofthePromotionof Agricultural Products.

1. The Office of Insurance Commission (OIC) The Insurance Commission Act has been effective since September 1, 2007. As a result, the Departmentof Insurance, initiallyagovernmentagency,haschangeditsstatustobecometheOfficeof InsuranceCommission(OIC),nowanindependentstateagencyandapubliccompanysimilartotheBankofThailandandtheOfficeoftheSecuritiesandExchangeCommission .TheOIC isresponsibleforregulatingand developingtheinsurancebusinessaswellasprotectingtheinsurancebenefitsandrightsofthepeople.

1. Mr. Areepong Bhoocha-oom Permanent Secretary,Ministry of FinanceChairman

2. Mrs. Wacharee WimuktayontPermanent Secretary,Ministry of CommerceCommission Member

ANNUAL REPORT 20124

Mr. Trairatvorakul holds a doctorate degree inBusiness Administration from Harvard University, USA.He possesses substantial background and experienceworking as an executive in various public and privateagencies relating to financial and capitalmarkets.Before assuming the position of Governor of the Bank of Thailand, he has held several executive positionsin a number of organizations such as Secretary-Generalof the Securities and Exchange Commission and the Stock Exchange of Thailand, and Managing Directorof Kasikorn Bank PCL. Apart from working at the Bankof Thailand, he plays a contributive role in the communaland educational sector , serving as Board member of the Thai Red Cross Society and Senior Expert memberof the Chulalongkorn University Council.

3. Mr. Prasarn TrairatvorakulGovernor, Bank of ThailandCommission Member

Mr. Socatiyanurak holds a doctorate degree infinance from the Wharton School, University ofPennsylvania, USA. An expert in the areas of economicsandfinance,hehasheldmanykeyexecutivepositionssuch as Chairperson of the National and Economic Advisory Council and Chairperson of the Committee for providing comments and recommendations on National Economic and Social Development Plan tobe submitted to the cabinet. He currently holds several senior positions, i.e. member of the National Industrial Development Board, the Thai TradeCompetition Commission (TCC), and the Researchand Development of the Thai Senate.

4. Mr. Vorapol Socatiyanurak Secretary-GeneralSecurities and Exchange CommissionCommission Member

Mr. Moontongroy obtained his masters degree inPolitical Science from Ramkhamhaeng University and completed his education at the National Defense College(Classof53).Alawexpert,heplaysacontributiverolein social and community development in the creationof a consumer protection network between the publicand the private sector. Apart from his position as Secretary General of the Committee of Consumer Protection, he also heads several public and private organizations namely committee member of the Industrial Environment, Federation of Thai industries, committee member of the Red Cross Organization, and committee member of the Foundation forIndustrial Development, the Ministry of Industry.

Mr. Payungsak obtained his bachelors degreein Electrical Engineering from Chulalongkorn Universityand completed his executive program for Senior Administration of Justice (2nd class) and the Pillarof the Kingdom Program : The Royal Initiative for Advanced Leadership (Class 2012). He has vastknowledge and experience in business administration,presently holding executive positions in the privateand public sector namely board member ofBangkok Bank, chairman of the Corporate Governanceand Social Responsibility Committee of Krungthai Bankand chairman and honorary Board member of the National Catastrophe Insurance Fund.

5. Mr. Jirachai MoontongroySecretary-GeneralCommittee on Consumer ProtectionCommission member(August 2012 – present)

6. Mr. Payungsak ChartsuthipolCommission Member in Business AdministrationNovember 2012 - present


Prof. Pramoolpol holds a masters degree in Insurance from the Wharton School of Pennsylvania,USA, which he had achieved through the scholarshipawardedbyThaiGovernment(TheOfficeofCivilServiceCommission).Heisveryknowledgeablewithmorethan40 years experience, having worked in a great numberof key positions in various agencies including Director of the insurance Office, the Ministry of Commerce,Board Director of Charoen Life Insurance PCL; and Director of Thailand Insurance Institute. He also contributedto the educational sector serving as a special instructorfor a number of public and private universities, and asthe Dean for the Faculty of Risk Management and Servicing Industry (Insurance),AssumptionUniversity.Currently he serves as a senior expert member of the Committee for Road Accident Victims Protection.

9. Prof. Chukiat PramoolpolCommission Memberin Insurance

Mr. Kittisathaporn holds a masters degree in Economics from Syracuse University, USA and completedthe National Defense course for participants from public,privateandpoliticalsectors(class8)fromtheNationalDefense College of Thailand. He is knowledgeable and has a lot of experience in the area of economicsand insurance. He used to hold a number of key positions in the Ministry of Commerce such as thePermanent Secretary of the Ministry of Commerce, Deputy Permanent Secretary of the Ministry of Commerce, Director General of the Insurance Department,Director General of the Department of BusinessEconomics, and the Director General of the Departmentof Foreign Trade. Currently he serves as Director in various companies in the private sector such as the Bank of Ayudhya PCL, and Central Pattana PCL.

10. Mr. Karun Kittisathaporn Commission Memberin Insurance

Dr. Watanagase holds an honorary doctoratedegree in Economics from Keio University, Japan, and has completed the National Defense Course for public, private and political sectors (Class 3) fromthe National Defense College of Thailand. She is an expert in economics and finance, having worked inmany key positions in the Bank of Thailand such as the Governor of the Bank of Thailand, the Deputy GovernorFinancialInstitutionsStability),theAssistantGovernor (financial Markets Operations Group) ,the Assistant Governor (Financial Institutions PolicyGroup),andtheAssistantGovernor(FinancialInstitutionsSupervisionGroup)

Mr. Poshyananda holds a doctorate degree in Economics from Cornell University, USA. and graduated from the National Defense College ofThailand(Class30).Hewasalsoawardedanhonorarydegree in Economics from Chulalongkorn University.He isanexpert ineconomicsandfinance,currentlyserving as chairman of the Directors, Sansiri PCL, and an expert member of various committees in public and private sectors such as chairperson of the Board, Thai Institute of Directors (IOD), theDirector, Cambridge Thai Foundation (CTF) underthe patronage of her Majesty the Queen; the Council Member, Walailak University; an Council Member,theOfficeoftheCouncilofStateofThailand.

7. Dr. Tarisa WatanagaseCommission member in Economics

8. Mr. Kovit PoshayanandaCommission Member in Finance

ANNUAL REPORT 20126

Mr. Ratanavijit holds a masters degree in Public administration from Indiana University, USA andgraduated from the National Defense College of Thailand(Class21).Heisanexpertinlawandcurrentlyholdsa number of positions in the legal and political bodiessuchasCouncilMember,theOfficeoftheCouncilofState of Thailand, Member in Monitoring and EvaluationCommittee,theOfficeofthePublicSectorDevelopmentCommission (OPDC), Member of the By-lawsConsideration Committee, the Secretariat to the Cabinet, and Member of the Administrative ProcedureCommittee,theOfficeoftheCouncilStateofThailand

Mr. Ongartsittigul holds a masters degree in BusinessAdministration(Finance)fromNewHampshireCollege,USA.Heisanexpertintheareaoffinanceand insurance, with vast experience in managing a number of agencies in public and private sectors.For example, he was the Vice President of J.P. MorganSecurities(Thailand)Ltd.SeniorVicePresident,Bank of America NA., Bangkok Branch, and SeniorAssistant Secretary General, Securities and Exchange Commission. He has also taken part in someactivitiesthat contribute to the benefit of the public. Forexample, he serves as member of the investmentadvisory committee for the Thai Red Cross Societyand member of Code of Ethics Committee forthe Federation of Accounting Professions.

11. Mr. Wattana RatanavijitCommission Member in Law

12. Mr. Pravej OngartsittigulSecretary-General

1.2 The Office of Insurance Commission (OIC) is responsible for the formulation of relevant policies as well for the promotion and development of the insurance business. The Commission is comprised of: The OIC is an independent state organization , not a government agency nor a state enterprise but a legal entity that carries out policies outlined by the Insurance Commission. Its main duties is to supervise, regulate and promote the development of insurance business to ensure effectiveness,transparency, and credibility while protecting the rights of the people in obtaining full benefits frominsurance.Keymeasuresofthe2ndInsuranceDevelopmentPlan(2010-2014)areoutlinedasfollows: 1.Buildconfidenceandgainaccessibilitytotheinsurancesystem 2. Strengthen the stability of the insurance system 3.Improvestandardofservicesandtheprotectionofinsurancebenefits 4. Strengthen the infrastructure of the insurance system


SECTOR 2 :ORGANIZATIONAL

STRUCTURE

ANNUAL REPORT 2012

Organization Structure of OIC

Insurance Commission Audit Committee

Secretary - General

Insurance Promotion andDevelopment

Insurance Stability Legal, Litigation andPolicyholder Protection

Deputy Secretary General(Promotion and Development)

Deputy Secretary General (Examination)

AssistantSecretaryGeneral

(OrganizationStratagic)

Deputy Secretary General (Supervision)

Deputy Secretary General(Legal, Litigation and

Policyholder Protection)

Strategic Planning & Enabler Primacy Activities

AssistantSecretaryGeneral(General

Administration)


(InsurancePromotion)

AssistantSecretaryGeneral(RegionalInsurance)

AssistantSecretaryGeneral(On-site

Examination)


(InvestmentSupervision)


(PolicyholderProtection)

AssistantSecretaryGeneral(Legal)


(Litigation)


(Development)

AssistantSecretary General

(OIC AdvanceInsuranceInstitute)


(SupervisoryStandard

Development)


(InsuranceProducts

Supervision)

AssistantSecretary General(Financial Analysisand ExaminationDevelopment)

8


SECTOR 3 :OVERVIEW OF INSURANCE

BUSINESS IN 2012

ANNUAL REPORT 201210

1. The Thai economy

Thailand’s economy in 2012 saw an expansion of 6.4% primarily attributed to the increase in

the industrial sector both in domestic and foreign production, the export sector, and the tourism sector.

2. Growth of the Insurance Business

Fortheentireyearof2012,thetotalamountofpremiumsintheinsurancebusinesswas569,903million baht (expanded by 21.48% from the previous year) . Of this, 390,474million bahtwere lifeinsurancepremiums(expandedby18.72%fromthepreviousyear)andnon-lifeinsuranceamountingto179,429millionbaht,a27.96%expansionfromthepreviousyear.

Overview of Insurance Business in 2012

Thailand’s economic overview (monthly)

*Source:FiscalPolicyOffice,MinistryofFinance

List

Expansion rate

GDP

Exports

Tourism

Consumption rate (private sector

- VAT

- auto sales

- motorcycle sales

Investment (private sector)

- Sale of commercial vehicles

0.1

14.0

20.7

11.7

4.6

7.9

(4.4)

3.2

24.8

14.0

10.5

60.3

11.3

31.7

2.7

16.1

53.3

19.3

0.3

18.7

3.1

3.7

24.7

31.1

10.6

22.9

13.0

17.1

4.4

2.0

9.8

6.3

77.0

4.4

62.3

18.9

18.5

39.3

18.2

268.7

24.8

231.9

26.9

66.0

29.7

509.9

28.0

445.8

13.4

30.4

7.0

162.7

22.4

155.8

6.4

3.1

16.0

14.1

86.6

5.8

76.2

3.1

(3.8)

8.6

20.2

78.6

(0.4)

53.5

0.4

(1.4)

8.1

12.0

(5.4)

(0.6)

33.5

(9.0)

(7.5)

(1.6)

6.6

(42.3)

(12.7)

(53.4)

2011Q1 Q3Q2 Q4 Q1 Q3Q2 Q4 NOV YTDDEC

2011 2012

InsurancePremium

Unit: Million Baht

Insurance

Life

Non-life

JAN-DEC2012

2011

469,116

328,897

140,219

76,567

35,173

78,151

33,685

83,445

34,090

90,735

37,272

89,679

42,298

92,588

42,350

94,913

44,374

113,293

50,407

35,370

15,250

46,511

16,854

390,474

179,439

111,740 111,836 117,535 128,007 131,977 134,938 139,288 163,700 50,620 63,364 569,903

% YOY 11.35

11.03

12.11

13.47

12.45

15.77

13.43

12.71

15.13

13.20

12.92

13.90

6.33

6.89

4.98

18.11

17.12

20.26

20.66

18.47

25.72

18.51

13.74

30.17

27.88

24.86

35.24

23.81

16.16

46.11

27.95

31.66

18.72

21.48

18.72

27.96

% YOY

% YOY

2011 2012

Q1 Q3Q2 Q4Q1 Q3Q2 Q4 NOV DEC


Life Insurance premiums

DirectLifeinsurancepremiumstotaled390,474millionbaht,an18.72%increasefromtheprevious year.Of this, ordinarypremiumsaccounted for 329,665millionbaht, (a 17.90%increase),grouppremiumsaccountedfor47,184millionbaht(a31.53%increase),andpersonalaccidentstotaled5,333millionbaht(a9.62%increase),whileindustrialpremiumstotaled8,292million baht, a 3.20% decrease from the previous year

Total Insurance PremiumJanuary-December 2008-2012

Comparison of insurance expansionafter the flood event Jan-Dec 2008-2012

Non-life Life Total Non-life Life TotalMillion Baht %

327,837

221,598

368,706

258,533

421,288

296,213

469,116

328,897

600,000 30.00

500,000 25.00

400,000 20.00

300,000 15.00

200,000 10.00100,000 5.00

0.002008 20082009 20092010 20102011 20112012 2012

569,903

9.738.265.30 3.70

12.97

16.6714.57

390,474

179,429106,239 110,173 125,075 140,219

14.2613.53

12.11

27.96

21.48

18.72

11.3511.03

Unit/million baht

20112011 2012 2012

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Nov Dec Nov-Dec

Life Insurance%yoy

%mom/qoq

328,89711.03

76,56712.45-9.80

78,151 12.712.07

83,44512.92 6.77

90,7356.898.74

89,67817.12 -1.16

92,58818.47 3.24

94,91313.742.51

113,29324.8619.37

35,37016.1612.60

46,51131.6631.50

390,47418.72

Ordinary%yoy

%mom/qoq

279,625 13.24

63,45614.5

-13.55

65,72113.423.57

70,59217.337.41

79,8558.7913.12

74,98818.17-6.09

77,97718.653.99

79,37412.441.79

97,32621.8822.62

30,41012.6916.81

40,88329.4134.44

329,66517.90

Industrial%yoy

%mom/qoq

8,535-5.18

2,163-4.63-0.31

2,123-9.26-1.84

2,162-2.811.86

2,087-3.8-3.48

2,097-3.020.49

2,057-3.12-1.94

2,040-5.67-0.82

2,0990.572.91

670-2.15-5.63

7191.127.31

8,292-2.84

Group%yoy

%mom/qoq

35,8270.05

9,8164.8718.79

9,05014.74-781

9,331-9.783.10

7,675-7.12-17.75

11,36515,7848.07

11,20723.84-1.39

12,00928.717.16

12,60264.194.94

3,86160.15-8.44

4,52469.9817.18

47,18431.53

Personal Accident%yoy

%mom/qoq

4,8659.97

1,1328.757.59

1,2577.7711.03

1,35916.698.12

1,1176.18

-17.80

1,2288.519.96

1,3487.229.71

1,4909.6510.57

1,26713.41-14.97

42916.96-5.30

3846.50

-10.38

5,3339.62


Non-life insurance premiums

Non-life insurance premiums amounted to a total of 179,429 million baht, a 27.96%

expansion from the previous year. Of this, Miscellaneous (Casualty) insurance premiums accounted

for 60,606 million baht, a remarkable 36.83 increase, Motor insurance premiums totaled

103,874 million baht (24.77% increase), Fire Insurance premium 9,759 million baht (21.04%

increase) and Marine and Transportation insurance premiums 5,190 million baht, a 12.45 %

increase from the previous year.

3. Number of insurance policies and Sum insured

Insurancepoliciessoldin2012totaled52,949,440,(a13.05%increasefromthepreviousyear),

with a sum insured amounting 114,240,502million baht, a 53.49 increase from theprevious year.

Policies are divided as follows:

List

January-December 2012 Number of enforced insurance policies

Number of policies (new)

Amount (million Baht)

As of December 2012

Number of policyholders (%)

2012 2012 2012 2012

Insurance 52,949,1440 114,240,502 68,823,580 106,37

%YOY 13.05 53.49 11.89

Life 5,132,896 4,916,939 21,007,036 32.47

%YOY 6.58 55.56 7.79

Non-life 47,816,544 109,323,562 47,816,544 73.91

%YOY 13.79 53.39 13.79

Unit/million baht 20112011 2012 2012

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 NOV DEC JAN-DEC

Total%yoy%mom/qoq

140,220 12.11

35,17315.77(0.93)

33,68515.13(4.23)

34,09013.901.20

37,272 4.699.33

42,29820.2613.48

42,35025.720.12

44,374 30.174.78

50,40735.2413.59

15,24946.11

(16.69)

16,85418.7210.53

179,42927.96

Fire%yoy%mom/qoq

8,0632.49

2,0154.68

14.62

2,270 3.74

12.69

1,907(4.47)

(16.00)

1,8716.29

(1.89)

2,55126.6136.32

2,68018.035.06

2,326 22.00

(13.19)

2,203 17.73(5.32)

81234.3382.88

94629.7416.48

9,75921.04

Marine &Transport%yoy%mom/qoq

4,6156.68

1,221 10.705.59

1,102 9.45

(9.75)

1,212 14.469.96

1,079(6.70)

(10.97)

1,271 4.04

17.77

1,29617.581.99

1,2563.63

(3.09)

1,367 26.648.81

51545.0810.99

38813.14

(24.68)

5,19012.45

Car%yoy%mom/qoq

83,25011.59

21,18815.582.65

20,112 15.01(5.08)

21,061 16.064.72

20,8901.25

(0.81)

24,38215.0816.71

24,85023.561.92

26,53325.996.77

28,10934.565.94

9,01945.70(0.89)

9,99020.9610.76

103,87424.77

Miscellanous%yoy%mom/qoq

44,29215.71

10,74919.13

(10.05)

10,201 18.95(5.10)

9,91013.54(2.85)

13,432 11.4935.54

14,09531.124.94

13,52532.59(4.05)

14,25843.885.43

18,72839.4331.35

4,90349.12

(40.89)

5,53013.6512.78

60,606 36.83


- Therewereatotalof 5,132,896 newlife insurancepolicies (a6.58% increase fromthe

previous year), with ordinary and group life insurance showing an increase of 8.14% and 24.87%

respectively.IntheOrdinarylifeinsurancecategory,1,380,729werewholelifepolicies(48.34%ofall

ordinarylifeinsurance),showinga18.99%increasefromthepreviousyear.Followingclosebehindare

the savings life insurance accounting for a total of 1,337,539 policies (46.83% of all ordinary life

insurance),a2.60%decreasefromthepreviousyear.Hence,itisevidentthatthelifeinsurancebusiness

placed emphasis on selling whole life insurance particularly protection benefits after retirement,

covering48.34%ofthemarketsharecomparedto43.93%thepreviousyear.

- Therewereatotalof47,816,514non-lifeinsurancepolicies(a13.79%increasefromthe

previousyear),categorizedasfollows:miscellaneousinsurance11,738,580policies,(a23.63%from

thepreviousyear),fireinsurance2,876,608policies(6.16%increasefromthepreviousyear)andmotor

insuranceaccountingforthehighestmarketshareofnon-lifeinsurancepolicies,withan11.56%increase

from the previous year

Number of new insurance policies

TYPE 20122012 2012

Q1 Q2 Q3 Q4 NOV DEC JAN-DEC %yoy

Ordinary 2,641,295 709,935 708,321 777,236 660,791 293,338 137,739 2,856,283 8.14

- WholeLife 1,160,353 336,820 334,829 381,919 327,161 139,540 74,894 1,380,729 18.99

- Savings 1,373,248 347,529 339,993 354,049 295,968 140,083 50,016 1,337,539 -2.60

- Specific 105,536 25,103 32,853 40,610 35,595 13,055 11,568 134,161 27.12

- Others 2,158 483 646 658 2,067 660 1,261 3,854 78.59

Industry 141,323 32,973 33,335 33,555 34,505 12,915 6,567 134,368 -4.92

Group 7,020 2,170 1,709 1,234 3,653 1,904 272 8,766 24.87

Personal Accident 2,026,561 661,229 491,938 514,878 465,434 163,110 149,690 2,133,479 5.28

TOTAL 4,816,199 1,406,307 1,235,303 1,326,903 1,164,383 471,267 294,268 5,132,896 6.58

Number of non-life insurance policies 2012

TYPE 20112012 2012

Q1 Q2 Q3 Q4 NOV DEC JAN-DEC %yoy

Risk from Fire 2,709,600 436,595 929,802 963,767 546,444 183,257 190,375 2,876,608 6.16

Risk from sea and transport 796,782 196,494 206,353 212,391 210,184 73,114 64,428 825,422 3.59

- Vessel 5,199 1,348 1,064 1,144 1,414 627 394 4,970 (4.40)

- commodities 791,583 195,146 205,289 211,247 208,770 72,487 64,034 820,452 3.65

Risk from motor vehicles 29,020,996 7,787,978 8,280,676 8,061,520 8,245,760 2,522,353 2,967,282 32,385,934 11.56

- compulsory 22,726,730 6,042,813 6,529,438 6,274,429 6,381,357 1,928,759 2,319,826 25,228,037 11.01

- Voluntary 6,294,266 1,745,165 1,751,238 1,787,091 1,864,403 593,594 647,456 7,147,897 13.56

Miscellaneous risks 9.494.812 2,889,291 2,991,492 2,965,046 2,892,751 961,807 952,058 11,738,580 23.63

- Risk from assets 503,913 40,645 49,905 71,492 81,133 22,521 29,711 243,175 (51.74)

- Personal Accident 7,375,497 2,205,809 2,201,095 2,151,106 2,096,468 699,474 665,604 8,654,478 17.34

- Health 801,909 218,761 212,559 198,085 182,445 62,739 57,203 811,850 1.24

- Others 813,493 424,076 527,933 544,363 532,705 177,073 199,540 2,029,077 149.43

Total 42,022,190 11,310,358 12,408,323 12,202,724 11,895,139 3,740,531 4,174,143 47,816,544 13.79


As of December 2012, the insurance business has a totalof 68,823,580 insurance policiespresently enforced, a 11.89%increase from the previous year, estimated at 106.37% of allpolicyholders, while last year’s figuredat95.99%.Ofthisnon-lifeinsurance accounted for 73.91%(an increase from last year’s65.58%), and life insuranceaccountedfor32.47%(anincreasefromlastyear’s30.41%)

4. Total assets of the insurance business

Life-insurance densityMILLION

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

number of life-insurance policy population insurance density

Non-life insurance densityMILLION

number of non-life insurance policy population insurance density

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

YEAR2011 2012

MAR JUN SEP DEC MAR JUN SEP DEC

ESTIMATED ASSETS (MILLION BAHT)

- LIFE INSURANCE 1,282,660 334,829 1,403,417 1,484,171 1,530,388 1,582,142 1,654,901 1,714,026

EXPANSION RATE % 16.30 15.07 16.94 19.44 19.31 20.07 17.19 15.49

- NON-LIFE INSURANCE 196,669 195,339 202,601 791,511 748,738 703,016 632,838 599,213

EXPANSION RATE % 20.34 15.58 13.81 308.35 280.71 259.90 154.34 -24.29

TOTAL 1,479,329 1,513,012 1,606,018 2,275,682 2,279,126 2,285,158 2,287,739 2,313,239

EXPANSION RATE 16.82 15.14 16.53 58.42 54.06 51.03 37.73 1.65

ESTIMATED INVESTMENT ASSSETS

- LIFE INSURANCE 1,221,911 1,253,096 1,336,255 1,412,062 1,454,098 1,497,176 1,571,377 1,628,663

EXPANSION RATE % 16.64 15.35 16.68 19.49 19.00 19.48 17.03 15.34

- NON-LIFE INSURANCE 155,559 156,254 159,441 162,735 178,785 180,764 182,421 196,024

EXPANSION RATE % 20.20 15.93 12.85 7.68 14.93 15.69 13.26 20.46

TOTAL 1,377,470 1,409,350 1,495,696 1,574,797 1,632,883 1,677,940 1,753,798 1,824,687

EXPANSION RATE 17.03 15.42 16.26 18.15 18.54 19.06 16.63 15.87

INVESTMENT ASSETS PER TOTAL ASSETS

- LIFE INSURANCE 95.26 95.10 95.21 95.14 95.02 94.63 94.95 95.02

- NON LIFE INSURANCE 79.10 79.99 78.70 20.56 23.88 25.71 28.83 32.71

TOTAL 93.11 93.15 93.13 69.20 71.65 73.43 76.66 78.88


TotalassetsoftheinsurancebusinessinDecember2012accountedfor2,313,239millionbaht,

a 1.65% increase from previous year. Of these, the life insurance assets amounted to 1,714.026

millionbaht (a15.49% increase from thepreviousyear)whilenon-life insuranceassetsamounted

to599,213millionbaht(a24.29%decreasefrompreviousyear).Thedecreaseisattributedtothe

201,888millionbahtdecrease(calculatedat42.26%)ofotherassets.

Investment assets of the insurance business as of December 31, 2012 totaled 1,824,687

millionbaht,(a15.87%increasefromthepreviousyear),estimatedat78.88%oftotalassets.Ofthese,

life insuranceaccounted for1,628,663millionbaht (a15.34% increase fromthepreviousyear)or

95.02%oftotalinsuranceassetswhilenon-lifeinsuranceaccountedfor196,024millionbaht(a20.46%

increasefromthepreviousyear),or32.71%oftotalinsuranceassets.

Mostoftheinvestmentassetsarelow-riskassetsnamelycertificateofdeposits,government

bonds,basicsavingsaccounts,treasurybills,mutualfundsandannuitiestotaling1,512,803million

baht,estimatedat82.91%oftotalinvestmentassetsanda14.59%increasefromthepreviousyear.

Investmentsincertificateofdepositswerethehighestat1,0222,578millionbaht,or56.04%oftotal

investmentassets.Ontheotherhand,high-riskinvestmentassetstotaled311,885millionbaht,or

17.09%oftotalinvestmentassets,a22.49%increasefromthepreviousyear,withstockinvestments

accountingforthehighestat187,317millionbaht,or10.27%oftotalinvestmentassets,a30.42%

increase from the previous year.

Insurance business

DEC 2012DEC 2011DEC 2010DEC 2009DEC 2008

others

loans

common stocks

government bonds

promissory notes

debentures

bank savings

bonds


-Low-riskinvestmentassetstotaled1,382,145millionbaht,or84.86%ofallinvestment

assets,a14.30%increasefromthepreviousyear.Investmentinbankbonds(includingtreasurybills)

totaled970,590millionbaht,or59.59%oftotalinvestmentassets,a10.82%increasefromtheprevious

year.On theotherhand,high risk investmentassets totaled246, 518millionbaht, calculatedat

15.14%oftotal investmentassets,a21.56%increasefromthepreviousyear. Investment inbonds

totaled134,835millionbaht(8.28%oftotalinvestmentassets),increasing29.68%fromthepreviousyear.

- Non-life insurance investments in lowriskassetstotaled130,658millionbaht,estimated

at66.65%oftotalinvestmentassets,a17.81%increasefromthepreviousyearwithbankdeposits

accounting for 30.16% (a 90.28% increase from last year) , bank bonds (including treasury bills)

accountingfor26.52%oftotalinvestmentassets,a10.59%increasefromlastyear.Ontheotherhand,

investment inhighriskassetstotaled65,367millionbaht,or33.35%oftotal investmentassets,a

26.12% increase from last year while the highest investment shares was estimated at 26.77% of total

investmentassets,a32.35%fromlastyear.

Life Insurance business

othersloanscommon stocksgovernment bondspromissory notesdebenturesbank savingsbonds

DEC 2011DEC 2010DEC 2009DEC 2008 DEC 2012

Non-life insurance business

DEC 2010DEC 2009DEC 2008

others

loans

common stocks

government bonds

DEC 2011 DEC 2012


It is thus evident that the insurance industry continue to place emphasis on low risk investmentsandhighcashflowtoensurepaymentofbenefitstoitspolicyholders.

5. Insurance Penetration

Thailand’s economy in 2012 expanded 6.4% resulting in an increase of insurance penetrationfrom4.45%thepreviousyearto5.02%thisyear,withinsurancedensitycalculatedat8,808bahtannually, higher than last year’s 7,321 baht per year, divided as follows: - Life Insurance penetration was estimated at 3.44%, higher than last year’s 3.12%, while lifeinsurancedensitywascalculatedat6,035bahtperyear,higherthanlastyear’s5,133bahtperyear. -Non-lifeinsurancepenetrationwasestimatedat1.58%,higherthanlastyear’s3.12%while non-life insurance density was calculated at 2,773 baht per year, higher than last year’s 2,188bahtperyear.

Insurance Penetration & Insurance Density 2008 2009 2010 2011 2012 2013

GDP as of 1988 (%yoy) 2.4 (2.4) 7.8 0.1 6.4 5.0

Insurance Amount (million baht) 327,837 368,706 421,288 469,116 569,903 660,771

% Penetration 3.61 4.08 4.17 4.45 5.02 5.38

Insurance Density (Baht) 5,172 5,804 6,595 7,321 8,808 10,150

Life Amount (million baht) 221,598 258,533 296,213 328,897 390,474 449,045

% penetration 2.44 2.86 2.93 3.12 3.44 3.66

EXPANSION RATE 3,496 4,069 4,637 5,133 6,035 6,898

Non-life insurance

Amount (million baht) 106,239 110,173 125,075 140,219 179,429 211,726

% penetration 1.17 1.22 1.24 1.33 1.58 1.73

EXPANSION RATE 1,676 1,734 1,958 2,188 2,773 3,252

INVESTMENT ASSETSNON-LIFE LIFE TOTAL

As ofDec 2012 % % As of

Dec 2012 % % As ofDec 2012 % %

BONDS 51.987 26.52 10.59 970,590 59.59 10.82 1,022,578 56.04 10.81

BANK SAVINGS 59,123 30.16 90.28 35,451 2.18 30.54 94,574 5.18 62.4223

DEBENTURES 15,413 7.86 19.95 209,835 12.88 23.86 225,248 12.34 23.59

PROMISSORY NOTES 3,907 1.99 (80.24) 166,236 10.21 21.51 170,143 9.32 8.66

GOVERNMENT BONDS 227 0.12 13.08 33 0.00 (10.81) 260 0.01 9.36

COMMON STOCK 52,482 26.77 32.35 134,835 8.28 29.68 187,317 10.27 30.42

LOANS 3,177 1.62 (15.87) 79,426 4.88 6.70 82,603 4.53 5.61

OTHERS 9,707 4.95 15.61 32.25 1.98 32.29 41,964 2.30 28.02

TOTAL 196,024 100 20.46 1,628,663 100 15.34 1,824,687 100 15.87

LOW RISK 130,658 66.65 17.81 1,382,145 84.86 14.30 1,512,803 82.91 14.59

HIGH RISK 65,367 33.35 26.12 246,518 15.14 21.56 311,885 17.09 22.49


6. Summary

In 2012 the insurance industry was confronted with economic downturns both domestically and

internationally as well the flooding situation that affected the entire country at the end of 2011,

resulting in the disruption of several insurance companies . The insurance industry , However, over all

the insurance industry recoveredwellwith a 21.48% growth rate. Following the flooding crisis, the

non-life insurancebusinessgrewat aspectacular rate,and for thefirst time inoveradecade, the

non-life insurance industry revealed a growth rate much higher than the life insurance industry. This

marks a change in the people’s attitude towards buying insurance policies. With the freedom to select

theirownmeansofprotectionandbenefitstosuittheirneedsandsecuretheirfuture,thepublicbegins

to adapt to the ever-growing insurance industry that continually seek ways to compete with future

trends through measures devised by the public sector to promote the industry’s growth as follows:

1.Disseminateinformationandknowledgetothepublicofallincomelevelsonthebenefits

of both life and non-life insurance so they gain an understanding that insurance is a means of building

stability in life and security of personal assets.

2. Manage the insurance business to ensure that policyholders receive their compensations

andbenefitswithefficiencyandaccuracy

3. Establish the National Catastrophe Insurance Fund to provide risk management through

insurance and reinsurance by increasing the capacity to extend coverage at appropriate premiums.

Thiscatastropheinsuranceschemewouldhelprestoreconfidenceamonginvestorsandwouldbein

reach for the population at large.

4.Establishtheexcisetax-exemptionpolicyforfirst-carbuyerstocontributetothegrowthof

the automotive industry, resulting in the increase in motor insurance premiums.

5.Encourage the development of a range of new insurance products to respond to the needs

and purchasing power to the people of all levels.

6. Promote an understanding to the public on the importance of savings and protecting their

assets through life insurance.

7. Develop various distribution channels to reach the people of all regions and all income levels.

Thenon-lifeinsurancewasabletogrowataremarkablerateduetothepremiumfiguresasfollows: - Themotorinsuranceisthemainsourceofincomefortotalnon-lifeinsurance,acquiring57%ofthebusinesswithagrowthrateof24.77%in2012.Thetaxexemptionpolicyforfirstcar buyers is the important factor attributing to the growth with the policy effective from September 16, 2011–December 31, 2012


- FireInsuranceandIndustrialAllRisk(IAR)Insurancedemonstratedaremarkablegrowth rate at21.04%and68.58%respectively.Thisincreaseisprimarilybroughtaboutbythefloodcrisis during the past year, and consequently the increase in insurance premiums. During the initial stage, the non-life insurance business sold reinsurance and was levied a high 20% premium rate, leading non-life insurancecompaniestoadjusttheirpremiumratesevenhigher,particularlythefireinsurancepremiumandtheIARinsurance premium which extended its coverage to natural disasters as well. Moreover, to compensatefordamagescausedbyfloodsin2011,companiesincludedvalue-addedinsuranceschemesandextendedtheir marketing channels to bancassurance. - Personalaccidentinsurancegrewconsistentlyat29.07%fromexpandingitsinsurancebasebymaintaining a steady number of policy renewals , seeking new clients, and developing value-added insurance products to expand to neighboring countries.

The tendency for long-term continual growth in the life insurance industry is attributed to theconsumers’confidenceintheinsurancesystem,thedevelopmentofarangeofinsurance products and new distribution channels to respond to the needs of the people. The bancassurance for example, has become an effective means in reaching the public.

In2013,theFiscalPolicyOffice,MinistryofFinancepredictedthattheeconomywillexpandafurther5%.Hence,accordingtotheOIC,directpremiumsoftheinsuranceindustryin2013isexpectedtoexpandataslowerratethanlastyearestimatedat16%,withlifeinsuranceestimatedat15%growthrate,non-lifeinsuranceat18%growthrate,withinsurancepremiumtotalingover600,000bahtasfollows:

Thesefiguresarearesultofacomparativebasein2012.Otherfactorshavebeentakenintoconsiderationsuchastaxexemptionmeasureofthefirstcarpolicywhenthefirstinstallmentendsbythefirsthalfof2013andtheincreasinginsurancepremiumduetohigherrisksin2012whichmaydecreasesome but will not return to the normal rate. Fire Insurance grew at a slower rate after expanding remarkably in 2012 and policyholders are expected to voluntarily renew their policies in 2012 with lowerpremiums and a comprehensive protection scheme. The personal accident insurance continues to growat a steady pace with a steady number of policy renewals and new clients, while developing value-addedinsurance products and expanding to neighboring countries.

The rapid expansion of the non-life insurance sector in 2012 is an indication of a good recoveryfromdamagescausedbythe2011floodswhichaffectedthefinancialstatusoftheThaiinsuranceindustry.It is hence important for the industry to be constantly prepared for unexpected changes in the future,fromitstransformationtoapubliccorporationandtheliberalizationoftheinsurancefinancialsectorin2015undertheAECframework.

Insurance

LifeNon-life

Total

449,045211,726660,771

6,8983,252

10,150

15.0018.0016.00

3.661.735.38

Premiums(Million baht)

Expansion rate%

Ins. Penetration%

Ins. Density(baht)


Life

Insurance Expansion 2002-2012 and trends for 2013Million baht

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013p

700,000

600,000

500,000

400,000

300,000

200,000

100,000

Insurance

115,51862,627

178,145

19.27%

22.41% 15.44% 13.47%10.25% 4.12%

16.25% 9.73%16.67%

14.57%

18.72%

16.00%

18.00%27.96%

12.11%13.53%3.70%5.30%5.88%7.72%11.56%11.42%13.63%13.87%

14.80%12.76% 10.70% 5.37%

12.58%8.26%

12.47%14.26%

11.35%

21.48%

16.00%

133,35571,160

204,515

151,31379,289

230,602

166,83088,454

255,284

173,70895,287

268,995

201,942100,888302830

221,598106,239327,837

258,533110,173368,706

296,213125,075421,288

328,897140,219469,116

390,474179,429569,903

449,045211,726660,771

Non-Life

Premiums

*Remark : 2013p = 2013 projection

2002 - 2012 and trends for 2013

Million baht

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013p


SECTOR 4 :OPERATIONS

AND SIGNIFICANTDEVELOPMENTS IN 2012


OPERATIONS AND SIGNIFICANT DEVELOPMENTS IN 2012 TheOfficeofInsuranceCommission(OIC)conductsitsoperationsundertheframeworkoftheInsuranceDevelopmentPlanVolume2(2010-2014)whicharetheprincipalguidelinesinthe functions and development of the insurance system as follows:

First and foremost in developing the Thai insurance system is gaining wide acceptance by the

people and the general public, assuring them that the insurance system is an important mechanism in

building stability in life and property, as well as in strengthening the country’s social and economic

system through the following measures:

PILLAR 1 To build confidence and gain access to the insurance system

1.1 Insurance Literacy The OIC took initiatives to promote and develop insurance through the following actions:

1. Organize informative talk sessions, seminars and training programs to educate the public on

benefitsofinsurancewiththecooperationofboththepublicandprivatesectors,aswellassettingup

24sessionsofconferencesandseminarsbothmainandregionaloffices.

Seminar on “Insurance and Catastrophe Insurance policy”for members of the Association of Thai Banks

Seminar entitled“Work operations of the Catastrophe Insurance Policy”

2. Organize21sessionsofinsurancepromotionalactivitiesatthemainandregionalofficeswith

the participation of organizations from both public and private sectors.

Presenting insurance awards 2012 Insurance Week 2012


3. Set up insurance youth programs in schools to provide an understanding and build an awarenessofinsurance,particularlylifeinsuranceandthevoluntarymotorinsurance.Withtheparticipationof513schools nation-wide, activities took the form of games and contests, with prizes given to schools, studentsand including teachers who have efficiently incorporated insurance into their teaching curriculum.Grants and scholarships were awarded to students who displayed creativity in presenting information on insurance through songs, talk shows, and short performances.

Insurance Youth project 2011 Winner of the Insurance Youth Project 2011

4.Organizeprogramstotrainatotalof13,925insurancevolunteersincommunitiesandregionalareas. Programs took the form of disseminating information, giving talks, giving advice and consultation on insurance, and providing accurate information and understanding to local communities so that they can learn to manage their risks effectively.

1.2 Corporate image promotion The OIC has engaged in various pro-active programs to disseminate information andunderstanding to the public on the role and dutiesof the OIC and at the same time, promote the corporate image to the public. The OIC has taken measures to instill upon the public a sense of importance in having a reliable insurance policy.

Project promoting road safety

Consumer Protection Day 2012OIC Press Conference 2012


1.3 Licensing and renewal of license for insurance brokers or agents

1. The OIC has approved a total of 43 organizations to serve as training institutes in the licensing

and renewal of license for insurance and non-insurance agents and brokers, 22 of which are life insurance

trainingcentersand22non-lifeinsurancetrainingcenters(TheThaiInsuranceInstitute,andTRTraining

andConsultingCompanyLimitedprovidebothlifeinsuranceandnon-lifeinsurancetrainingworkshops).

These companies continually conduct training programs to develop insurance knowledge, principles and

procedures to life and non-life insurance agents and brokers, with a total number of participants as follows:

Type Number of participants

Life insurance agents 260,474

Non-life insurance agents 20,650

Life insurance brokers 43,009

Non-life insurance brokers 49,179

Total 373,312

2.Arandominspectionof38insurancecompaniesbetweenJanuary-December2012approved

as training institutes indicated that for the most part, these companies conducted their training courses

and examination on the application, the licensing and the renewal of life and non-life insurance agents

and brokers in accordance with the principles, procedures and conditions prescribed by the Insurance

Commission.

3. Revise the Registrar Order No …../2012 to have all juristic persons working as life insurance

/non-insurance brokers to submit a report on their business operations

3.1Submitanelectronicreportontheirannualbusinessoperationswithin5months

following the end of accounting year.

3.2 Submit an electronic report on direct insurance and reinsurance for 3 months

(January-March),6months(January-June),9months(January-September)and12months(January-December)

within 30 days following the end of accounting period

4.InspectandconformtotheLifeInsurance/NonlifeinsuranceAct1992andlawspertaining

to insurancebrokersof juristicpersons, including15financial institutions, the licensingof 31 juristic

persons as insurance brokers and 142 license renewals.

5.Superviseall456,696agents/brokersintheOICdatabase,classifiedas279,556lifeinsurance

agents, 26,097 non-life insurance agents, 69,228 life insurance brokers, and 81,815 non-life insurance

brokers. In 2012 , statistics of examinations, licensing , license renewals, and registered insurance agents

of Universal/Unit-Link are as follows:


6. Post a name list of Life/non-life insurance agents and brokers requested for the issuance of

insurance license and renewal of licenses on the OIC website to enable the public to verify the status

of agents/brokers approved by the OIC.

7. Implement a comprehensive management scheme wherein agents/brokers can coordinate

with the OIC electronically to save time and money and facilitate the process of testing and payment

procedures.

8.Improvedistributionchannelsandintegratedservicesinsellingproductsin3simplesteps:

Pre Sale, Point of Sale and Post Sale.

9.Revise the system of issuing and renewing insurance licenses for agents/brokers that has been

certifiedandapprovedbyISO9001:2008standards.

Type ExamLicense

permits

License

renewals

Registered agent

Universal Unit Link

Life insurance agents 194,346 115,952 80,988 3,330 548

Non-life insurance agents 8,851 5,580 8,819 - -

Life insurance brokers 23,196 19,124 38,823 497 -

Non-life insurance brokers 36,897 25,648 42,343 - -

Total 263,290 166,304 170,973 3,827 548


1.4 The development of insurance products

1. Life Insurance 1) Annuity Life Insurance

Having compiled information, data, problems and recommendations from the business

sector, the OIC recognize that the public do not have a full understanding of the Annuity life insurance,

theimportanceofalong-termsavingsplanandthebenefitsthatcanbegainedfromsuchapolicy.

With the increase in the elderly population, assuring a good quality of life require

more expenses than ever due to the changes in the way of life in this world of information technology.

These factors have repercussions on the long-term social and economic system in Thailand, and having

a reliable pension plan is a good mechanism in supporting the aging society and building a savings

scheme. In promoting the expansion of the pension insurance business to better reach the public,

the OIC has devised the following measures :

1. Disseminate information on the annuity life insurance so the public understand

the importance of saving towards retirement.

2. Educatethepubliconthebenefitsthatcanbegainedfromanannuitylifeinsurance

such as the reduction of taxes.

3. Develop the annuity life insurance to include a wider range of preferences to better

fulfilltheneedsofthepublic.

4. Devise measures to promote savings through the annuity life insurance.

2) Guideline to critical diseases

At present life and non-life insurance companies have requested for a set of guidelines

of critical diseases that companies can use as a basis in determining life insurance policies. The OIC

has thus set up a working committee consisting of representatives from the OIC, the Medical Council

of Thailand, the Thai Life Assurance Association, and the Thai General Assurance Association to jointly

definethetermandcompilealistof50diseasesthatlifeandnon-lifeinsurancecompaniesareselling

and set a standard guideline. Set guidelines of Malaysia and Singapore have been used as guide

references in determining the highest level of protection

3) The Insurance Bureau System Project

The Insurance Bureau System is a project that collects database of all life insurance

policies received and contracts signed. These data can be used as statistics in revising insurance premiums,

in preparing statistical reports as well as in supervising and inspecting the overall insurance business,

while serving to provide services to the public in obtaining details and information in a prompt and

systematic manner.


4) Setting a standard in calculating benefits according to life insurance contracts To ensure that life insurance companies conform to standard practice in calculating paymentofbenefitsaccordingtoactuarialprinciplesandconformingtoconditionsoutlined inthelife insurance contract.

Project Outline:In2012,theOICsetouttoinspectthepaymentofbenefitsof4lifeinsurance companies according to policy types: (1)TraditionalPolicy (2)Investment Link Policy namely Universal Life and Unit Link life policies

Inspection method: Proceed with inspection according to checklist/interview administrators and related sectors/ observe actual work routine in payment of benefits and inproviding services as outlined in the life insurance contract/ random check the payment of benefitsaccording to checklist.

Outcome: There is a need to coordinate with the business sector in setting a standard work practice in the following areas: collecting levy from the insured/method of calculations , extended term insurance/ calculating interests according to conditions outlined in the contract/ calculating present value of policy returns if the insured wish to retract his policy mid year/ premium returns for additional contracts if the insured wish to retract his policy. Regarding the cases afore-mentioned, the OIC has informedtheAssociationtoimplementastandardformofpracticeonallpaymentofbenefits. 5) Guidelines and conditions in advertising insurance products At present the insurance business has created a range of insurance products to competewith present trends and to meet the needs of the public. . Products have been advertised in various forms of the media to better reach the general audience Hence, to ensure that people are receiving accurate information on products being advertised, the OIC has consulted with the business sector namely the Thai Life Assurance Association, the Gene

(1)Advertisementshouldnotbefalsifiedorexaggerated (2)Advertisementshouldbeclear,simpleandnotmisleading (3)Advertisement should not lead to a misunderstanding regarding insurance policy orpaymentofbenefits (4) Advertisement should not contain estimation of benefits gained or received, orcommission gained by the sales agent, unless the life insurance policy is non guarantee/variable, unit-linked/investment linked, or Universal Life, whereby these insurance policies need to state their sources clearly. (5)Advertisementsclaiming“nophysicalcheck-uprequired”muststateclearlyiftheinsurancerequestformrequiresthepersontodeclarehimselftobephysicallyfit.Ifso,theadvertisementmustindicatethatdeclaringoneselfphysicallyfitisonefactorinconsideringtheinsurancepolicy.


(6)Ifreferencesaremadeonscientificreportsorstatisticalinformation,sourcesmustbeclearandinformationshouldbeverifiableandnotbetakenoutofcontext. (7)Advertisementthatusetextsorimages,warningandexplanationsshouldbeclearlyprinted , legible and readable (8)Advertisementsthatuseaudiosound,warningandexplanationsshouldbestatedand pronounced clearly (9)Statementofwarning“Consumersshouldalwaysunderstandthetermsandconditionsofprotectionbeforedecidingtobuyinsurance”istobestatedorwrittenclearly (10)Insurance brokers selling insurance policies through advertisements have to strictlyconform to the above conditions . In addition, insurance brokers should not mislead the insured to think that they are the insurers. Advertisements are to clearly state the name of the insurance companyselling the policies

2. Non-life Insurance 1) The in-season rice insurance project 2012 The Cabinet has passed a resolution approving the in-season rice insurance project for2012onJune262012whileallotting555millionbahttosupporttheproject,andprovidefarmerswithprotection from damages caused by natural disasters. TO ensure continuity in coverage, the funding will be used under the National Catastrophe Insurance Fund to secure the well-being of farmers.

Protection coverage and premium rates (1)Thericeinsurancewillbegivenmaximumcoverageof1,111baht/raiagainst6perils(floods,drought,windstorms,coldweather,hailandfire)and555baht/raiforpestandcontagiousdiseases (2)Premiumrate,includingvalueaddedtaxamountto129.47bahtperraidividedinto2sections:farmerspay60baht/raiandthegovernmentpays69.47baht/rai. 2) Revising payment of medical expenses for victims of motor accidents in need of emergency care It is the Thai government’s policy to give people the right to access medical servicesthrough from the Social Security Fund, The National Health Security Fund, and the Government Health Insurance, In case of medical emergency, the government’s policy states that patients protected under these 3 funds are able to receive medical care immediately without paying for medical expenses, as medical bills will be settled by the funds and reimbursed to the hospitals later. With regard to the Road Accident Victims Protection, the OIC , overseeing the Victims Compensation Fund has revised the process in paying medical expenses by including the fund as another government project. Furthermore, the E-claim has been introduced for on-line payments tocover medical bills of victims of road accidents regardless of their insurance coverage. Victims canexercise the right to allow the hospital to reimburse medical bills from insurance companies or from the Victims Compensation Fund.The Road Accident Victims Protection will settle the medical bills and theinsurancecompanyinvolvedwillcollectmedicalexpensesfromthosewhoviolatedtrafficlaws.


3) National of Catastrophe Insurance Fund (NCIF) 3.1 Fund establishment (1)Thecabinetapprovedtheestablishmentofthe“EmergencyDecreeonNationalCatastropheFundB.E.2555withtheobjectiveinmanagingcatastropherisksbymeansofinsuranceandreinsuranceandprovidingfinancialsaidstoinsurerforthesumof50,000millionbaht (2)The decree was approved by the Parliament in February 2, 2012 and approved by the Senate February 13, 2012 (3)On February 7, 2012, the cabinet appointed a board committee to control and supervise the fund, with Mr. Payungsak Chartsuthipol as executive committee (4) TheFundlaunchedthecatastropheinsurancepolicyonMarch282012atSantiMaitree,the Government House, with the Prime Minister presiding over the opening ceremony.

3.2 Objective of the Fund (1)Toassistthepublicinprovidingprotectionfortheirbusinessandassets (2) To ensure that the reinsurance scheme is adequate and provides the lowestpremium rate (3)To enable the public to gain access to the catastrophe protection at an appropriatepremium rate (4)Tobuildconfidenceamongforeigninvestorsandbusinessoperatorstocontinueto do business in Thailand

3.3 Underwriting process Thecommitteehasdefinedtheterm“catastrophe”asfollows: (1)Thecabinetannouncesthesituationtobecatastrophicundertherecommendationsof the Department of Disaster Prevention and Mitigation, the Ministry of Interior (2)Thecompensationoftheinsuredunderthecatastrophefundexceed5,000millionbaht per event occurring within 60 days with claims requested by a minimum of 2 policyholders, the damage cost of which will be according to the report submitted to the OIC, or (3)Incaseofearthquakes,amagnitudemeasuringabove7ontherichterscaleor,incase of hurricanes, a wind speed greater than 120 km/hr

Insured Type Household / SME / Industrial

Coverage Flood / Earthquake / Windstorm

Sublimit Household : 100,000 baht SME : 30% of the suminsured

Policy details


1.5 Regaining confidence in the insurance business

InanefforttobuildtrustandconfidenceamongtheThaipubliconthe insurancesystem

followingthefloodingevents,TheOfficeofInsuranceCommissionhasimplementedseveralmeasures

including the setting up of 4 working groups :

1)Aworkinggrouptocreatetrustintheinsurancebusinessbyengaginginprovidingaccurate

information to the press both locally and internationally, following up and reporting on risk management

measures for flooding situations, encouraging foreign reinsurance consumers to be confident and

purchaseprotectionpoliciesatasuitablepremiumrate.Othersignificantmeasuresincludevisiting

important clients in Japan and England, organizing an Asian Insurance Review seminar attended by

over 200 participants in the reinsurance business.

Topic Detail

Insured Type Household / SME / Industrial

Coverage Flood / Earthquake / Windstorm

SublimitHousehold : not exeeding 100,000 bahtSME : not exeeding 30% of the suminsuredIndustrial : not exeeding 30% of the suminsured

DeductibleHousehold : noneSME / Industrial : 5% of the suminsured

PremiumHousehold : 0.5% SME : 1% Industrial : 1.25%

3.4 NCIF Update (28 March 2012 - 7 January 2013)

Insured Type Number ofpolicies

Sum Insured(million baht)

Premium(million baht)

HouseholdSMEIndustrial

539,94647,476 3,745

38,8638,244

15,878

19480

176

Total 591,167 2,932,531 450


2)Aworkinggroupengagedinseekingdirectionstomanagecatastrophesandexaminewaysother countries establish catastrophe promotion funds , leading to the establishment of a similar fundinThailandforthefirsttime. 3) Aworkinggroupengagedinrestoringthepublic’sconfidencebyseekingvolunteersfromthebusinesssectortoassistfloodvictimsandquickeningtheprocessinpayingclaimsanddamagecompensationsfromthefloodingsituation.Significantcourseofactionincludethedistributionofbasicnecessitiestoareasaffectedbyfloods,assistingfloodedvehiclestosafetyregardlessoftheirinsurancepolicy,establishingaprojecttorepairvehiclesdamagedbyfloodsatareasonablerates,andcoordinatingwiththeindustrialestatetoassisttheminclaimingrepaymentandcompensationsfromflooddamages. 4)Aworkinggroupengagedinimprovingthequalityofinsurancebusinesspersonnelandoperatives so they are able to provide consistent and reliable public service under standardized supervisionframework.MeasuresincludecreatingflexibilityintheOIC’srequirementsingrantingpermission to foreign insurance experts and professionals as well as senior engineers to assist in the assessmentofdamagescausedbythenation-wideflooding,includingrevisingmethodsincalculatinginsurance reserves to include reinsurance receivables according to their level of credit.

Furthermore, the OIC proceeded to follow up overdue payment of claims and compensationsas follows: 1) Invite directors and administrators of 20 insurance companies with the highest claims for damages to discuss issues on claims and repayments, obstacles, solutions and process of claims payment. 2) Join Mr. Pakorn Visananusit, representative from the Federation of Thai Industries to trackcomplaints of injustice and delayed claim payment. Problems were raised and taken into considerationfor further assistance 3) Meet with the business sector namely members of the industrial estate and the Thai General Assurance and engage in public relations on the Catastrophe Insurance Promotion fund 4)InformthroughthemediathatthosewhowerenotjustifiablycompensatedfrominsurancecompaniestocomeseekassistanceattheOICheadofficeforinsuranceadviceorcallhotline1186 5)Ofthe90,414complaints,241werecomplaintsfiledattheOIC,224havebeenresolved,or92.95%ofallcomplaints,amountoftotalclaimspaidamounting7,140,925,162.43baht.Allcomplaintswere treated equally and received the full cooperation from insurance companies.

Opening ceremony of the National Catastophe Insurance Fund (NCIF) on March 28th, 2012 at Santi Maitri Building.Has been honored by Yingluck Shinawatra (Prime Minister) to preside over the opening ceremony.


PILLAR 2 TO STRENGTHEN THE CAPACITY OF THE INSURANCE SYSTEM

Buildingpublictrustandconfidenceisthekeytodevelopingastrongandefficientinsurance

system that can meet future challenges and requires professional management and supervision to

strengthentheinsurancesystemundertheframeworkoftheRisk-BasedSupervision(RBS)

2.1 Risk-Based Capital : RBC

1. Monitor and analyze Risk-based Capital as well as modernize methods of analyses,

list problems, obstacles and resolutions

Having enforced the risk-based capital regulation effective Sept 1, 2011, the OIC continues

to monitor and seek feedback and comments from insurance companies and has proceeded in compiling

reports and organizing various meetings such as follow-up reports and analysis, conduct risk based

capital supervision based on quarter 3/2011 capital fund reports. Furthermore, meetings and discussions

are set up to seek ways to calculate capital adequacy for non-life insurance companies, set up meetings

with auditors to revise the 2nd quarter RBC report to meet accepted standard requirements .This

includes the study and translation of principles, supervisory standards, guidance papers with regard to

standard-basedinsurancesupervisiononprudentialrequirement,aswellasfinancialsectorassessment

programs (FSAP) of Insurance Core Principle 16 and 17. In addition, with the flood events during

July 1- December 31, 2011, estimated damages exceeded normal circumstances rendering the need to

exerciseleniencyincapitaladequacytoenablecompaniestoconformtoRegistrarnotificationonrules,

proceduresandconditionsofcapitalfundreportofNon-lifeInsuranceCompany(Vol4)B.E.2555(2012)

2. Compile information, analyze data, and seek improvements on the risk-based capital

regulation framework effective September 1, 2011

To further develop the RBC framework, the OIC has compiled data and information by requesting

companies to provide data that will be utilized in analyzing the effectiveness of the RBC regulations

currentlyinplace.Insurancepersonnelandexecutivesaretofilloutsurveyformswithregardtothe

suitability of the capital adequacy at present , the work operations under the risk-based capital framework,

and any work obstacles or areas that need improvement. These information will be analyzed to help

improveandrefinetheRBCframeworkforbettereffectivenessandefficiency.


3. Stress Test

The stress test is an important mechanism in determining the stability of the Enterprise Risk

Management :ERM , the 2nd of the 3 pillars of IAIS .The OIC organized the Stress Testing Implementation

andApplicationduringSeptember4-52011at theOIC HeadOffice with guest speakers from the

Monetary Authority of Singapore Bank , Bank Negara Malaysia and Price Waterhouse Coopers, Thailand

to share their knowledge and expertise to the 30 participants who attended the session. In addition,

a summary of the stress test was written in a form of a conceptual paper to provide a mutual under

standing of the importance of stress testing.

4. Operational Risk

The continual development and implementation of operational risk is essential in the overall

supervision and the OIC places great importance in complying with IAIS requirements and submitting

an operational risk summary report modeling from other organizations as the Solvency II of IEOPA,

APRA of Australia, MAS of Singapore, BNM of Malaysia and JFSA of Japan .

5. Assessment of insurance reserve

Under the Risk-based capital regulation effective September 1, 2011, the valuation of assets

andliabilitiesshouldbebasedonfairvalue.Asaresult,theassessmentofinsurancereserve(abinding

agreementbetween the insurancecompanyand the insured)under the risk-basedcapital regulation

should be based on the principle of fair value as well.

In the assessment of insurance reserve based on fair value, the actuary must take into

consideration that his assessments are valid and correspond to the type of insurance policy at an

estimatedvaluethatwillminimizetheimpactoffinancialloss.Inanefforttosethigherstandardsfor

actuaries, the OIC has requested life and non-life insurance companies to submit report n calculation

of liability from insurance policies and steps in insurance reserve assessment based on fair value. They

are to proceed as follows:

5.1Establishguidelinesindataanalysisandverificationandreporterrorsoncalculationof

liability from insurance policies.

5.2Offeradviceandrecommendationstocompaniesinformulatingreportsandattendto

problems encountered by companies so all companies duly conform to regulations.

5.3Analyze insurance reserve assessment and take appropriate measures for necessary revision.


2.2 Reinsurance

1. Insurance Commission Notification on Rules, Procedures and Conditions of reinsurance

of Life/Non-life insurance Company B.E. 2012

To ensure that insurance supervision meet internationally accepted standards, the OIC has laid

out regulations, methods and conditions for re-insurance requiring insurance companies to devise a

reinsurance management strategy approved by the company’s executive committee, to be submitted

annually to the Commission. Furthermore, re-insurance with foreign companies are permitted with

companiesratednotlowerthanlevel4(BBB-)accordingtoS&PMoody’sA.M.orFitch,ratingagencies

approvedby theOIC. Insurance companies are not permitted to engage in financial reinsuranceor

finitereinsuranceasawayofconcealingthecompany’sactualfinancialstate.

TheInsuranceCommissionNotificationisaimedtoprovidecompanieswithasystemizedway

of managing risk with re-insurance by selecting re-insurance companies that are reliable, trustworthy

andacceptedbyinternationalstandards.Thiswillreflectthefinancialstabilityofinsurancecompanies,

demonstrating proper skills in risk management conforming to risk management policies, capital risk

management and reinsurance management strategies.

2. Reinsurance management strategies for life and non-life insurance companies

Reinsurancemanagementstrategiesfollowingtheinsurancecommissionnotificationonrules,

procedures and conditions of reinsurance are to be approved by the companies’ board of directors

and should include important issues namely reinsurance policies and reinsurance risk management

conforming to level of risk agreed upon by reinsurance companies, level of risk retention, sum reinsured,

as well as monitoring outcome, inspecting and revising insurance underwriting processes and compiling

a list of executives responsible for reinforcing these management strategies.

The OIC has proceeded to seek reinsurance management strategies which comprises as part of

theInsuranceCommissionNotificationonrules,proceduresandconditionsofreinsurance.Themain

objective is to encourage companies to maintain good corporate governance, demonstrate transparency

in reinsurance and risk management, as well as provide data and information for the OIC to better

understand the companies reinsurance methods and procedures.

3. Revision of reinsurance reports

TheInsuranceCommissionNotificationonrules,procedures,andconditionsonreinsuranceof

Life and Non-life insurance companies requires the submission of a reinsurance report according to

the structure, condition and period stipulated by the Registrar in order to monitor the work operations

of reinsurance companies and implement appropriate measures for risk management.

The OIC has proceeded to revise the structure and format of the reinsurance report to be

draftedasanotificationinordertoobtainmorecomprehensiveandrelevantinformationthatwillserve

beneficialtoinsurancebusinessoperations.


2.3 Business Continuity Management (BCM) and Business Continuity Plan (BCP) of insurance companies

TheOIChasimplementedaplanofoperationsinBusinessContinuityManagement(BCM)and

BusinessContinuityPlan(BCP)withanaimtoprovideinformation,respondtoemergencies,minimize

disruption and to continue to resume normal operations in an unforeseen event. These plans are

important particularly in critical business functions where it is essential to mitigate risks at a timely

response and provide clear directions in recovering business operations in a suitable manner. If it is

determinedthatthereisadeficiencyinthenormalbusinessoperations,theBusinessContinuityPlan

will be invoked as part of standard practice in risk management.

TheBusinessContinuityManagement(BCM)andBusinessContinuityPlan (BCP)are important

measuresininsuranceriskmanagementasoutlinedintheICP8checklistoftheInternationalAssociation

ofInsuranceSupervisors(IAIS)withregardtoriskmanagementandinternalcontrol,stressingtheneed

to have a contingency plan in place with a business continuity and crisis management scheme to

reduce the impact of a hazardous event.

2.4 Audit Operations

The OIC has conducted audit operation of 27 insurance companies to ensure mid-long term

stabilityoftheinsurancesystemwhilebuildingpublictrustandconfidence.Companyinspectionfocused

on risk factors reveal a satisfactory level of risk control and management, with the exception of 2 companies

with unacceptable management performance and conduct:

1. PhoenixInsuranceCompany(Thailand),demonstrateunstablefinancialstatus,withamount

of debt exceeding amount of assets, and not conforming to devised rules and regulations. The Registrar,

with the approval of the Board of the Office of Insurance Commission , ordered the temporary

discontinuance of operations since February 20, 2012 . The company was given a timeframe to stabilize

itsfinancialstatementandconductitsoperationsaccordingtodevisedrulesandregulations.Oncethe

company demonstrated satisfactory management standards, the Registrar with the approval of the Board

oftheOfficeofInsuranceCommissionorderedthecompanytoresumeitsoperationsonJune28,2012.

2. SongsermInsuranceCompanyLimiteddemonstratedinefficientmanagementinthepersonnel

sector,theaccountingandfinancialsystem,insurancesales,underwritingsystem,compensationpayments,

risk management, inspectional and internal control. The company was ordered temporary discontinuance

of operations since July 20 2012.


Inassessingthefinancialstabilityandsoundnessofinsurancecompanies,theOICconducted

asummaryfinancialanalysisandperformancecomparisonof90insurancecompaniesfromthecurrent

month, previous 3 months, current year and previous year as well as a measure of quality control

through the early warning system . As of September 30, 2012, the following assessment has been made:

1.25Lifeinsurancecompanies

•companywithnocapitalfund

•24companieswithlegalcapitalfunds

(1)2companieswithadequatecapitalfundslowerthan150%butexceeding100%

(2)22companieswithadequatecapitalfundsexceeding150%.Therewerenocompanies

demonstratingmainratio(capitalassetsperinsurancereserve)abovestandardnorms,whilecompanies

that demonstrate other secondary reserve exceeding standard norms are as follows:

- Prorate underwriting expenses : 1st year 2 companies

- Prorate underwriting expenses : Following year 3 companies

- Prorate return on investments : 2 companies

-Proratereturnoninvestmentsofshareholders:5companies

2.65Non-lifeinsurancecompanies

•1companydidnotsubmitcapitalfundreport

•1companyhasnocapitalfund

•63companiespossesslegalcapitalfundswith

(1)7companieswithadequatecapitalfundslowerthan150%butexceeding100%

(2)56companieswithadequatecapitalfundsexceeding150%,23ofwhichhavea

financial standingabove standardnorms,with companies thatdemonstrateother secondary reserve

exceeding standard norms are as follows:

- 41 companies with claims and insurance expenses considered as revenue

- 4 companies with prorate investment assets per insured debt

-5companieswithoutstandingpremiumperestimatedoutstandingpremium

- 26 companies with prorate return on investments of shareholders

It must be considered, however that the majority of non-life insurance companies were massively

affectedbythe2011floodingevent,withdamagesoccurredexceedingthelevelinnormalinsurance

underwriting . As a consequence, most companies have high amount of claims and a considerable net

loss in performance level, with return on investments per shareholder lower than normalcy. Several

companies increased their registered capital expenses to compensate for the loss, while the OIC has

devisedmeasurestoassistinsurancecompaniesreconstructtheirfinancialpositionbyincreasingthe

capacity to extend coverage at appropriate premiums. Relief measures include relaxing capital charge

requirementsforflood-affectedinsurancecompaniesandexemptionfromtherequirementtoinclude

their net reinsurance assets in the calculation of reinsurance credit risk capital charge. These measures

aretoprovideinsurancecompanieswithmeanstoasmoothfinancialrecoverywhilemaintainingtheir

risk-based capital requirement.


2.5 International cooperation

1. Insurance cooperation with the Asean region

OIC hosted the 15th Asean Insurance Regulators’ Meeting between Dec 12-14, 2012 at

the Shangri-La Hotel, joining together insurance regulators from 10 Asean countries to discuss

and exchange ideas on ways to develop and promote insurance in the region, problems that

could affect the insurance sector, as well as joint cooperation between the Asean public and

private insurance sectors .The meeting was attended by 67 delegates from 8 countries namely

Brunei, Cambodia, Indonesia, Laos, Malaysia, Singapore, Thailand, Vietnam, and 2 organizations,

theAseanSecretariatandtheAseanInsuranceTrainingandResearchInstitute(AITRI)

Several issues were raised during the meeting such as the outcome of the 16th Asean Finance Ministers meeting with regard to insurance particularly the catastrophe risk insurance, the general view of insurance in the Asean region , the world economic situation, trends, insurance development,as well as various measures of members countries such as the capital and solvency regimes in Asean including upholding international standard practices in insurance development and supervision.

Opening Ceremony of the 15th AIRM Meeting


2. Cooperation between the OIC and the National Association of Insurance Commissioners (NAIC)

Delegation from the National Association of Insurance Commissioners (NAIC) consisting

of Mr. Michael F. Consedine, Insurance Commissioner of the Pennsylvania Insurance Department

and Mr. Ekrem M. Sarper., International Policy Analyst paid a courtesy visit to the Secretary General

during the 2nd OECD – Asia Regional Seminar: Enhancing transparency and monitoring of insurance

markets, hosted by the OIC on January 26, 2012 at the Centara Grand, Bangkok.

During the visit, topics of discussion included the joint cooperation and exchange of

know-how between the OIC and the NAIC in the past and the future, natural disasters and

Thailand’s management schemes during the flooding situation, and the insurance investment

and promotion of US companies in Thailand

3. ThecooperationbetweentheOICandtheInternationalAssociationofInsuranceSupervisors(IAIS) As a member of the IAIS and the Education Subcommittee, the OIC joined with the IAIS to carryout the following tasks: 1)Joininalliance with the International Association of Insurance Supervisors Multilateral MemorandumofUnderstanding(IAISMMOU) 2)Report on the work performance of the IAIS and offer recommendations on the IAIS CommitteeMeetings and Education Subcommittee between February 21-24 , 2012 in Basel, Switzerland , the IAIS GlobalSeminarandIAISCommitteeMeetingsbetweenJune18-21,2012attheCaymanIslands 3)ConducttheIAISICP’SSelf-Assessmentfor2011togetherwithotherrelatedsectors 4)Conduct a Teleconference meeting with President of the Signatory Working Group and LeadValidatorofIAISMMOUonOctober1,2012at7pm(MeetingRoom208)

OIC executives welcome representatives from the NAIC


4. Cooperation between the OIC and the Korean Insurance sector

Representatives of the OIC participated in meetings and discussions with the Korean

insurance business sector and other related organizations including the Financial Services

Commission (FSC), the Financial Supervisory Services (FSS), Samsung Life Insurance Ltd between

May 29- June 3, 2012 to visit companies in Seoul and discuss the development and supervision

of the insurance business and means of cooperation in insurance between Korea and Thailand.

In addition, the Secretary –General of the OIC and Mr. Seok-Dong Kim, chairman of FSC signed aMemorandumofUnderstanding(MOU)onJune11,2011attheInterContinentalHotel,Bangkok,witnessed by Thai and Korean insurance sector representatives. The objective of the MOU is to strengthenthe insurance cooperation in the exchange of knowledge and information between Thai and Korean Insurance, including the development of insurance personnel and other related assistance.

OIC Secretary-General meets Chairman of the Financial ServicesCommission, South Korea

OIC Secretary-General signs an MOU with Mr. Seok-Dong Kim MOU Signing Ceremony between OIC and FSC


After the MOU, Mr. Dae-sik Kim, president of the Korean Research Institute cordially gave a lectureon lessons and experiences of insurance liberalization in South Korea followed by a seminar andexchange of ideas participated by Mr. Banyong Pongpanich, Board president of Patara Securities Ltd (Public),KhunRapeeSucharitkul,advisertoThaiInsuranceCompanyLtdandKhunKheedejAnansiriprapa,CEO of AXA Insurance PCL who shared their vast knowledge and experiences on insurance liberalization in South Korea which will help prepare Thailand for its own liberalization in the very near future.

MOU Signing Ceremony Mr. Dae-Sik Kim shares his views on Insurance liberalization

5. Investment prospects in Myanmar Representatives from the OIC together with executives from the Thai General Insurance Association, the Thai Life Insurance Association, the Thai Insurance Brokers Association, and the Thai Association of Insurance and Financial Advisers conducted an educational visit to Myanmarduring November 14-17 2012 to enhance cooperation in insurance supervision, to expand the insurance market, and to seek investment opportunities between the two countries. During the visit, the insurance group paid a courtesy call to H.E. Dr. Mg. Maung Thein , MyanmarFinance Minister , Mr. Aye Min Thein, Managing Director of Myanmar Insurance and Chairman of Insurance Regulatory Body of Myanmar, and Mr Aye Lwin, Secretary –general of the Union of MyanmarFederationofChamberofCommerce and Industry (UMFCCI)where theyhaddeepdiscussionsonthe economic overview and policies of Myanmar including business development plans of theinsurance market.

OIC Secretary-General and delegationvisits the Ministry of Finance and Revenue, Myanmar

OIC Secretary-General attends a symposium in Myanmar

In addition, the OIC , envisioning the importance of enhancing cooperation between the two governments, proposed to provide Myanmar with educational assistance in the development of insurancelaws, the basis of insurance supervision, as well as basic insurance infrastructures.


6. Supervisory College for AIA Group Seminar Representatives of the OIC participated in the Supervisory College for AIA Group Seminarorganized by the Office of the Commissioner of Hong kong between April 25-26 2012 at CentralGovernment Offices in Hong kong 2 with the aim of exchanging ideas and information in insurancesupervision between AIA Group countries.

7. Supervisory College on Tokio Marine Holdings Inc. Meeting OIC representatives participated in the Supervisory College on Tokio Marine Holdings Inc. Meetingorganizedby theFinancialServicesAgency (FSA) during June11-122012 inTokyo, Japan.Theaimofthemeeting is tobuildagroupsupervision, increasebetterefficiency ingroupsupervision,andexchange information on group risk supervision.

8. The 48th Annual International Insurance Society seminar OIC representativesattended the48thAnnual internationalSociety seminarunder the topic“InsuranceFrontiers:SustainabilityandInnovationinEmergingMarkets”organizedbytheInternationalInsuranceSociety(IIS)duringJune17-20,2012atRiodeJaniero,Brazil.Theobjectiveoftheseminaristo address global issues facing the insurance industry as well as seek new and more dynamic paths in insurance growth and opportunities.

9. The 2nd Regional CEO Forum 2012 OIC representatives attended the 2nd Regional CEO Forum 2012 held in Singapore between July12-13on the topic“Managing inUncertainTimes“ aimedat theexchangeof ideasbetweenparticipants with regard to groups-risk supervision, strategies , solutions, and problem-solving techniquesduring the present unstable economy. 10. The 7th Asian Forum of Insurance Regulators (AFIR) OIC representatives participated in the 7th Asian Forumof Insurance Regulators (AFIR) heldbetween July 25-28 ,2012 inMacau, the People’s Republic of China, providing an opportunity forinsurance supervisors in the Asia-Oceania region to share supervisory information, strengthen capabilityof Asian insurance regulators as well as facilitate the well-balanced development of the insurance markets of the Asian countries.

OIC representatives attend the 7th Asian Forum of Insurance Regulators (AFIR)


11. The 19th IAIS Annual Conference and IAIS Committee Meeting OICrepresentativesattendedthe19thIAISAnnualConferenceandtheIAISCommitteeMeetingof the International Association of Insurance Supervisors held between October 7-12 2012 inWashington D.C, the U.S.A . The conference achieved its objective of improving mutual regulatoryunderstanding and building stronger collaborative working relations between insurance regulators while the committee meeting addressed the supervision of insurance development and theimplementation of standard regulations in various insurance sectors.

12. Seminars/Discussions with foreign insurance regulators and organizations The OIC has engaged in cooperation with various foreign insurance organizations andestablishments such as the International Monetary Fund , the World Bank, the Asian Development Bank,European delegations, and the India-Thai Business Association throughout the year to discuss and exchange ideas on insurance supervision. 13. Host of international seminars/ training programs/international meetings The OIC has hosted many international conferences, seminars, and training programs in insurance supervision as follows:

1) The 2nd OECD- ASIA Regional Seminar TheOIChostedthe2ndOECD-ASIAregionalseminar“Enhancingtransparencyandmonitoringofinsurancemarkets”withthejointcooperationoftheOrganizationforEconomicCooperationandDevelopment(OECD)duringJanuary26-272012attheCentaraGrandHotel,Bangkok.Therewereatotalof100participatingmembers,with9countriesfromthepublicsector,19internationalorganizationsandeducationalinstitutionsand8Thaiorganizationsandeducationalinstitutions,includingmembersof the OIC.

OIC Secretary-General with NAIC representatives at the 19th IAIS Annual Conference

The 2nd OECD-Asia Regional Seminar held in Bangkok, Thailand


2) AITRI – Toronto Centre Workshop on On-site and Off-site Examination

TheOIC,incooperationwiththeAseanInsuranceTrainingandResearchInstitute(AITRI)organized

the AITRI -Toronto CentreWorkshop onOn-Site andOff-site examination held on April 2-5 at the

Centara Grand Hotel, Bangkok. Theworkshop , attended by 50 participants from 13 countries and

4 organizations, was aimed at providing an understanding on on-site and off-site supervision and

acquiring technical know-how to support the conduct of off-site and on-site examination according

to best practice, which addressing relevant topics such as group-wide supervision, internal controls,

corporategovernance,andanti-moneylaunderingandcombatingthefinancingofterrorism.

3) U.S. Insurance Regulation and Supervision

TheOIC, incooperationwith theNationalAssociationof InsuranceCommissioners (NAIC) ,

organized the U.S. Insurance Regulation and Supervision seminar held at the OIC office during

July18-202012.Attendedby63participants with11members fromtheAseancountries (Brunei,

Cambodia, Malaysia, and Singapore) , the seminar was aimed at providing more knowledge and

expertise on insurance examination and supervision in the Asean region.

AITRI-Toronto Centre Workshop in Bangkok

Training/Seminar U.S. Insurance Regulation and Supervision


14. Other international activities and seminars 1)Participatinginmeetingsoninsuranceliberalizationtoexchangeideaswithotherorganizationssuch as 1.1 Working Committee on Financial Services liberalization held on January 12, 2012 (1stmeeting),April25,2012(2ndmeeting)andNovember2012(3rdmeeting)attheFiscalPolicyOffice. 1.2 Working Committee on Financial Services Liberalization under the ASEAN FrameworkAgreement on Services: WC-FSL/AFAS held on February 8, 2012 in Bangkok (32nd meeting), onJune20-212012inKualaLumpur,Malaysia(33rdmeeting)andonOctober3,2012inSingapore(34thmeeting) 1.3 MeetingtoestablishaworkplantowardsbecomingmemberoftheAEC(2012-2015)on February 14, 2012 and February 27, 2012 at the Ministry of Commerce 1.4 DTN’sAnnualSymposium2012:AEC2015andBeyondorganizedbytheDepartmentof Trade Negotiations held on February 24, 2012 at the Plaza Athenee Hotel 1.5A conference on World Trade Organization Dialogue Framework on March 12, 2012attheOfficeofthePermanentSecretary,MinistryofCommerce. 1.6 ASEANFinanceCommitteemeetingheldonMarch15,2012attheOfficeofthePermanentsecretary,MinistryofFinance(1stmeeting)andonJuly1,2012attheFiscalPolicyOffice(2ndmeeting) 1.7GroupconferencewithfinancialmonitoringsectorstopreparefortheAECheldattheFiscalPolicyOfficeonApril23,2012 1.8MeetingtodrafttheFinancialServicesliberalizationagreementforThai-ChilefreetradetalksonJune3,2012attheFiscalPolicyOffice 1.9Cross-SectoralandMulti-StakeholderConsultationonDisasterManagementandHumanitarian assistance meeting and the Eight Coordinating Conference on the ASEAN Socio-Cultural Community(8thSOC-COM)duringJune25-26,2012inIndonesia 1.10 ProposeThailand’spositionintheTrans-PacificStrategicEconomicPartnershipAgreement:(TPP) 1.11 Meetings with the ASEAN IntegrationMonitoringOffice:(AIMO)undertheASEANSecretariat to report on Thailand’s readiness for insurance liberalization

2)Meetings/discussions to support the ASEAN scheme of Compulsory Motor Vehicle Insurance 2.1 Meetings/discussions on Thai Excursion Vans to Malaysia according to theIndonesia-Malaysia-ThailandGrowthTriangle:IMT-GTheldonJanuary16,2012attheOfficeofNationalsocial and economic development 2.2 First Meeting to consider the Asean Framework agreement on border transportationofpassengersheldonApril19,2012attheMinistryofTransportation 2.3 Thailand’s IMT- GT Post Summit Planning Meeting under the JDS framework held onMay21,2012attheOfficeofNationalSocialandEconomicdevelopment. 2.4 Thailand -Malaysia Committee on Joint Development Strategy for Joint DevelopmentStrategyforBorderAreas(JDS)–The2ndMeetingwasheldDecember6,2012attheRoyalPrincess,Bangkok


PILLAR 3 Law revisions and the protection of rights and benefits

Thequalityofinsuranceserviceandprotectionofinsurancerightsandbenefitsforthepublic

directlyaffectstheimageandconfidenceoftheinsuranceindustry.Inordertoimprovethelevelof

servicesandprotectionofrightsandbenefits,thefollowingmeasureshavebeenimplemented:

3.1 Protection of rights and benefits

1. Insurance dispute resolution

In order to provide better efficiency in resolving disputes ,theOIC has divided the type of

complaints and/ or disputes into 4 levels as follows:

1)Simpleandbasiccomplaintscanberesolvedwithin3hours

2)Complaintsthatinvolvelegalmatters/bindingagreementswillberesolvedwithin10days

3)Complaintsthatrequiretruthandaccuracywillberesolvedwithin30days

4)Complicateddisputessuchasdisastersorpoliticalsituationsrequireteamworkandjoint

efforts for a amiable resolution

Type Complaints Resolved PercentageResolved by

ISC

Resolved by

compromiseNote

Life 555 513 92.43 339 174 Complaints

increase

35.58%from

previous

year

Non-life 2,722 2,603 95.63 1,845 758

Broker / Asent 38 38 100 13 25

Total 3,315 3,154 95.14 2,197 957

2. Improvement of Insurance Hotline 1186

TheOIChasimprovedservicesoftheInsurancehotline1186byincorporatingtheautomatic

servicesystem,theintelligentnetwork(IN)andvoicemailsystem(I-box)tobetterservethepublicand

create a positive image of insurance. In addition, the public are able to call for advice, recommendations

orinsurancequeriesduringofficehoursbetween8:00am-4:00pmandduringofficialholidaysaswell.


3.2 The development of the E-claim system

Victims of car accidents will be treated by hospitals automatically whether they have insurance

or not. With E-Claim, the emergency payment plan will cover medical bills of victims of road accidents

regardless of their insurance coverage. The Road Accident Victims Protection Co. will settle the medical

bills, providing the quality and well-being to the public without having to pay their own expenses.

With the online E-claim hospital data will be automatically linked with insurance companies, whereby

medical establishments will be compensated within 7 days, minimizing time and unnecessary expenses,

and facilitating victims of motor incidents to be provided with the quality and care they rightfully deserve.

3.3 Assisting flood victims

Thefloodingeventin2011becameanimmensenaturaldisasterinThailandaffectingnumerous

households, small businesses, large industries all over the country. The OIC provided assistance by

ensuringthatthepublicreceivedfullrightsandbenefitsfromdamagescausedbythefloods,allclaims

and compensations can be summarized as follows:

Type of

insurance

Claimed Cases Claim Paid In Progress

Numberof Cases

Amount (Million baht)

Numberof Cases

%Amount (Million baht)

%Numberof Cases

Amount (Million baht)

1. Life insurance

and Personal

Accident

213 27 213 100.00 27 100.00 - -

2. Motor vehicle

insurance39,927 4,126 39,779 99.63 4,114 99.70 148 12

3. Asset insurance

-Fire(domicile)

- Fire

(commercial/SME

36,283

3,904

3,092

12,149

35,815

3,591

98.71

91.98

2,903

7,353

93.87

60.52

468

313

189

4,796

4.Industrial All

Risk Insurance10,087 404,348 6,258 62.04 319,535 79.02 3,829 84,813

Total 90,414 423,745 85,656 94.74 333,933 78.81 4,758 89,812


3.4 Procedure of dispute settlement by arbitration The OIC follow procedures in settling insurance disputes by resolution and by arbitration whichisadisputerelatingtotheinsurancepolicybetweentheinsuredperson,thebeneficiaryorinjuredpartyas a result of the insurance policy and the insurance company. The OIC has taken the following steps: 1. Educate the public on legal rights and benefits including procedures of disputesettlement by arbitration The OIC has organized training programs and seminar to educate and provide information to thepublic,insurancecompaniesandprivate/publicsectorsonlegalrightsandbenefitsandproceduresofdisputesettlementbyarbitration.Theaimistoinformthepublicontheirlegalinsurancebenefits,andincaseofaninsurancedispute,theOIChasprocedurestoprotectrightsandbenefitswithregardtodisputesettlementbyresolutionorbyarbitration.TheseminartookplaceatheOICregionalofficeinUbonrathanionJune28-292012(includingregions4,5,6)

2. Educate the public on procedures of dispute settlement by arbitration for thoserepresenting the litigant The OIC organized a training seminar on October 17, 2012 to provide knowledge andunderstanding to the public on the procedures of insurance dispute settlement by arbitration that is effective , fair and objective, including moral and ethical guidelines to protect individual rights and benefits.

Training program on dispute settlementby arbitration in Ubonrachathani

Seminar on insurance dispute settlement


3. Improve work operations on insurance dispute settlement in 18 provinces in the northern region. The OIC has expanded and developed work operations of dispute settlement by arbitration byopening a regional arbitrationoffice inChiangmai since2003,providing services to18northernprovinceswithbetterefficiencyandeffectiveness.Toensurethatmechanismsofdisputesettlementisinplace,aworkingseminarwasjointlyorganizedbetweenthenorthernarbitrationofficeandtheOICChiangmaiofficeonDecember13-14,2012

4. A compilation of sample cases of disputes settled by arbitration The OIC has compiled sample cases of disputes settled by arbitration to be used as guidelinesof standard practice in insurance disputes , and serving as information to the public and educational institutions for study and research purposes. The OIC has printed the compilation in 2 copies – Book 1/2012 and Book 2/2012 as well as in E-book located in the OIC website.

3.5 Developing the legal system The OIC has revised the parent law of insurance by organizing a meeting to exchange ideas with various insurance sectors such as the life and non-life insurance companies, The Thai LifeAssurance Association, the Thai General Insurance Association, the Insurance Brokers Association, and the Society of Actuaries of Thailand

Dispute settlement by arbitration, Chiangmai OIC regional office


PILLAR 4 PROMOTION OF INSURANCE INFRASTRUCTURE

With Insurance infrastructure considered an important mechanism in developing the insurance

industry, it is necessary to promote human resource development, information technology development

as well as the insurance supervision to ensure a solid fundamental infrastructure. The following

operations have been implemented

4.1 Human resource development

The OIC continues to develop the work capabilities and quality of insurance employees to

fulfillthehighestobjectiveingainingknowledge,acquiringskillsandenhancingpersonalattributesto

perform their given tasks to the best of their abilities.

To ensure that employees of all levels have maximum performance traits and abilities, the

OIC has engaged in the 10 rules of high performance in assessing all employees ‘duties and operations

to match their capabilities. The OIC expects that employees have the skills and knowledge to perform

their duties with the readiness to shift to other work sectors for multi skills and performance, while

motivating them to perform at a satisfactory level and be a contributive asset to the organization.

4.2 Information technology development

1. Company Inspection

AccordingtotheRegistrarcommandmentno,47/2554, life insuranceandnon-life insurance

companiesaretosubmitafinancialreport,amarketreportandanoperationsreportforbudgetyear2012

totheOICasameansofrevisingthecompanyinspectionsystemforbetterefficiency.

2. Developing insurance products and distribution channels

The application and examination for insurance agents and brokers now include and on-line

systemwhereapplicationcanbeprocessedthroughthebankwithin3daysforincreasedefficiency,

inadditiontoimprovementsofapplicationsystemattheOICofficeinVipavadeedistrictandtheOIC

officeDivision12inSongkhlaprovince.


3. Infrastructure development

1)Informationsystemshavebeenrevisedin7mainareasasfollows:

- computerized program in transferring funds to the life and non-life insurance funds

andtotheOICoffice

- accounting program for Victims compensation fund

-downloadingprogramforpersonalprofileofinsurancebrokersandagents

-programinassetsreportoffinancialinstitutions

- on-line survey to set up training programs for insurances employees

-companyandemployeeprofileviaintranetcanberevisedandeditedbyemployees

- reinsurance database

2)Back-OfficeOperatingSystem

An additional 4 systems have been revised namely the renuneration for child education,

remuneration for medical expenses, monitoring purchasing and hiring operations, and the assessment

of equipment

3)Revisionofinsurancepolicydatabase

- request approval of group-risk assessment and risk management projects of insurance

companies

- develop system of custodian securities report of insurance companies, report of grants,

and insurance market report

4)improvetheOICwebsiteofregionalofficesbyestablishingasinglesitefor12regionaloffices

that is standardized, accurate and complete

5)ImprovetheelectronicpostalsystembyintroducingthePostfixprogram,afreewarepostal

system that is compatible with smart phone, thus allowing meetings and

6)Setupacallconferencesysteminregionalanddistrictofficestofacilitatecommunication

withtheheadofficeasawayofreducingtimeandexpense.TheconferenceSIPinmainanddistrict

OICofficesandandIPPhoneforregionalofficescan

7)InsuranceBureauSystem

The Insurance Bureau system is designed as the center of insurance information to help regulate,

support and promote the insurance industry in its operations, its market conduct, management of

claims and benefits, assessment of insurance reserve, risk management. establish premium rates

according to risk factors etc. In addition the system is able to help bring about better operational

stabilityandefficiencythatcreatestrustamongthepublicaswellasamong industrialsectorsboth

within the country and abroad. Working groups have been set up with the private sector to establish

an information center in life insurance and non-life insurance while seeking ways to effectively manage

information that can be used accurately and with utmost transparency, while providing maximum

benefitstotheinsuranceindustry,thepublic,andrelatedsectors.Hearingshavealsobeenorganized

to exchange opinions with all insurance companies to ensure that insurance information is appropriate,

accurate and accessible to all, creating just and equality in the insurance industry, which will gradually

pave the way towards insurance liberalization and prepare for the upcoming AEC.


4.3 Corporate Management

1. OIC Good Corporate Governance

The OIC is aware of the need to have good corporate governance in place to establish sound

management structureandcontrolling systemtoensureefficiency, transparencyandaccountability.

The OIC’s corporate governance is based on the standards of the Organization for Economic Cooperation

andDevelopment(OECD)andtheInsuranceCorePrinciplesdevisedbytheInternationalAssociation

ofInsuranceSupervisors:IAISandcomparabletothecorporategovernanceofotherfinancialinstitutions.

The OIC’s corporate governance comprises of committee-level governance and office-level

governance under 4 guidelines:

1)Theefficiencyofthesupervisionframeworkofthecommittee

To ensure that the committee has the skills, knowledge and expertise to conduct its work

operationsandofficeworkingperformance.

2)Suitablesupervisionresponsibility

(2.1)ToensurethattheOfficehasdevisedoperationalstrategieswithanefficientsystem

firmlyestablishedtomonitorworkoperationsandassessperformanceofexecutives.

(2.2)Toensurethatcommitteemembersperformtheirdutieswithhonesty,diligence,

and attentiveness based on complete accurate information, taking full responsibility in their given

tasks,ensuringthebenefitoftheorganizationandofclaimantsastheprimarygoal.

(2.3)ToensurethattheOfficecarryoutitsoperationsaccordingtocorrectmoral

conscience,maintaininghonestyandrighteousness,performitsdutieswithefficiencyandeffectiveness

formutualbenefitoftheorganizationandofclaimants.

3)Disclosinginformation,transparency,andcommunication

ToensurethattheOfficediscloseimportantinformationwithaccuracyandinatimelymanner,

with a reliable information system that is precise, correct and trustworthy

4)RiskManagement,InternalcontrolandInternalAudit

(4.1)TobuildconfidencethattheOfficehasaneffectiveriskmanagementschemeand

a reliable internal control system

(4.2)Totrustthatauditorsexercisefullrightandsupporttheworkperformanceof

committee members in the inspection , management, supervision, risk management, internal control,

internalaudit,includingasoundandreliablefinancialreport,hencereflectinganimageofclarityand

transparency.


2. Risk Management and Internal Control

1)InternalControl

In view of the importance of good corporate governance, the OIC conducts its work operations

based on 3 fundamental steps namely Internal Audit, Internal Control and Risk Management, conforming

to the principle of good management, assuring that operational strategies of the OIC will lead to its

goalofanefficientandeffectiveorganization.TheOICdutifullyconformstoregulationsoftheAudit

CommissionInternalControlStandards2544Regulation6indesignatinganinspectortoreporttothe

Audit Committee, Supervisor and Inspection Committee to conduct an internal control at least once

ayearwithin90daysfollowingtheendofthebudgetyearorthecalendaryear.

The OIC has formulated an internal control assessment report and an internal control revision

plan2012(Dec31,2012)byevaluatingimportantoperationsthathasaneffectontheprincipleobjective

of the organization.

The internal auditor has revised the internal control assessment report and considers the work

operations satisfactory, reasonable, vigilant, demonstrating that the OIC places great emphasis on the

improvementanddevelopmentofinternalcontrolsystemthatisviableandefficient.

2)RiskManagement

The OIC has formulated a risk management scheme taking into consideration internal and

external factors that has an effect on the organization’s 4 objectives namely:

•Thepublichasknowledgeandunderstandingoftheimportanceofinsurance

•Insurancecompaniesarefinanciallystablewiththecapabilitytocompete

•The public is treated fairly from the insurance system and insurance companies

have a standardized level of service.

•Theorganizationhasaninfrastructurethatsupportsinsurancedevelopment.

Furthermore, the OIC has an effective management system in place that supports work operations

that isefficient, transparentundertheprinciplesofgovernancenamelygoodcorporategovernance,

accurate data and information, viable information technology system with an effective personnel and

financialmanagementmechanism.

There are 4 types of risks as divided by the OIC namely Strategic Risk, Operational Risk, Financial

Risk, and Compliance Risk. A risk assessment is conducted quarterly to control and closely monitor

any sign or changes, with a control self-assessment system in place as well, reporting consistently to

the audit committee .


3. Internal Audit

In 2012, the OIC placed emphasis on Good Governance, Risk Management , Control and

Compliance (GRC), which are important factors that lead an organization to achieve its objectives

effectivelyandefficiently.BuildingknowledgeonGRCaswellasControlSelf-Assessment(CSA)have

been incorporatedwith the annual inspection2012where therearea totalof27units (10 in the

central region,17 in theprovincial region). Effortshavebeenmade to instill knowledge , skills and

experienceonriskmanagement,internalcontrol,andahands-ontrainingprogramentitled“Projecton

buildingknowledgeandunderstandingonriskmanagementandestablishinganinternalcontrolsystem”

for executive-level who are the main key in the creation and development of risk management and

internal control scheme that is viable, continuous, efficient, and effective. The system shouldbe

effectively built in the daily work operations of the organization to ensure effective internal auditing

withthehighestbenefittotheorganizationusingthehumanresourcesavailable.Internalauditorsthat

have been assigned to both the central and provincial region as well as the auditing of both the Life

Insurance and Non-Life Insurance Fund are a means of developing skills and experience of auditors

in addition to enrolling in internal auditing training programs. The vital factor in success is working as

a team , conforming to the international standards for the professional practice of Internal Auditing

and adhering to the code of ethics. In addition, it is important to exchange skills and knowledge by

learning all types of auditing, using audit programs as guidelines with the assistance and coaching of

more experienced auditors. Applying knowledge and audit skills to different types of situation and of

organizations with varying standards will help identify internal operations that are sub-standard and

non-conforming to rules and regulations. This will allow auditors to review, revise and offer recom

mendations for improvement and assess the audit operations that is lacking in clarity and precision.


4.4 Strategic Development

The rapid environmental changes in today’s world has a large impact on the social and

economicstructurewhetheritbethefinancialcrisisaffectingeconomiesinEuropeandtheUnitedStates,

China’s emerging role in the global economy, the economic groups in emerging Asia, or the aging

society all over the world. Furthermore, other factors now have repercussions on our livelihood such

as the unpredictable weather changes causing frequent natural disasters that are becoming more

and more violent. Loss and damages in life and assets have been recurring leading to the need for

stability and protection from the unforeseen risks. With the ASEAN Economic Community pushing for

liberalization, there is a need to study how the changing environment has an effect on the insurance

business so Thailand will be prepared to compete in the international arena in the near future.

The OIC has organized a project in studying ways for Thai Insurance to compete in the ever-changing

environment, seeking its potential and capacity, hence outlining the following objectives:

1. To provide information in seeking direction in the promotion and supervision of the insurance

business and revise the insurance development plan to meet the changing environment with the

potential to compete in the future

2. To encourage the public and private sector of the insurance industry to cooperate with one

another in developing and strengthening Thai insurance

4.5 The OIC Advanced Insurance Institute

The OIC Advanced Insurance Institute has adhered to the Insurance Development Plan

Volume 2 in strengthening the infrastructure of the insurance system. In 2012, the Institute developed

several insurancecoursesfor improvingandgainingacademicknowledge infinanceand investment,

riskmanagementandother insurancefieldsforOICpersonnelandthose inthe insurancebusiness .

Programs include Insurance executive programs, Thailand Insurance Leadership programs, Chartered

InsuranceAdvisor(CIA)aswellasthegainingknowledgeininsurancerulesandregulationsforinsurance

agents and brokers.


Insurance program forinsurance staff and personnel

Insurance supervisorycurriculum

E-Learning educationalservice

Higher executive

Intermediateexecutive

Lower executive

Operational level

Insurance program forgeneral public

Program in developing public speaking skills

Regular insurancecurriculum

Special insurancecurriculum

Program in licenserenewal for insurance

intermediaries(3rd and 4th session)

Thailand insuranceleadership program

Selling life insuranceand investment program

Chartered insuranceadvisor (CIA)


1. Insurance Supervisory Curriculum (ISC)

The Institute has developed an Insurance supervisory curriculum for OIC staff and employees

withanaimtodevelopexpertiseandknowledgeininsurance,financeandinvestment,riskmanagement,

inspection of information technology system, new accounting standards, local and international

economic trends , and other areas of insurance. The curriculum is divided into 4 levels: the higher

executive level, the intermediate executive level, the executive level, and the operational level.

In2012,theInstituteorganized19trainingsessionswithalargeofparticipantsasfollows:

Level # of participants %

Higher executive 171 17.1

Intermediate Executive 173 17.3

Executive 524 52.4

Operational 132 13.2

Total 1,000 100

2. Courses for non-OIC personnel

Courses for the general public are divided into 2 types: General courses and special courses

as follows:

1. General course

This course aims at developing knowledge on insurance pertaining to rules, regulations, risk

management, compensation for agents/brokers conforming to the Insurance Act BE 2535 with

amendment (no.2) BE 2551 stating that the person/s wishing to obtain or renewal their insurance

licenses have to undergo training programs set up by or approved by the OIC.

The Institute organized a training program for license renewals of insurance brokers as follows:

1)3rdsessiontrainingprogramforlicenserenewalsofinsurancebrokers

2)4thsessiontrainingprogramforlicenserenewalsofinsurancebrokers

3)TrainingprograminsellingUnit-Linkedinsurancepolicies

In comparing the number of people attending the training course for license renewals of

insurancebrokers/agents,forthe3rdsessionthisyear(2012),therewere65participantscompared

to69in2011,ora5.80%decrease.Forthe4thsessionthisyear(2012)therewere17,898participants,

2,977morethanthepreviousyear(2011),ora19.95%increase.Thenumberofparticipantsofboth

sessionsin2012total17,963,demonstratinga19.83%increasefromthepreviousyear.


Table 1: Statistics of Participants Enrolled in Programs for License Renewals

of Insurance Agents/Brokers 2010-2012

Course/Target

Group (Broker)

2010

Amt.

2011 2012 %

Amt.%

ChangeAmt.

%

Change2010 2011 2012

2.1.1 3rd License

Renewal193 69 -64.25 65 -5.80 2.05 0.46 0.36

2.1.2 4th License

Renewal Session9,209 14,921 62.03 17,898 19.95 97.95 99.54 99.64

Total 9,402 14,990 59.43 17,963 19.83 100 100 100

The Unit-linked insurance policy course has been designed by the OIC Advanced Insurance

Institute to train insurance agents and brokers. In 2012, there were 11 sessions with 1,241 participants

in total, a decrease of 620 people from the previous year, or 33.32% decrease

2. Special training programs

1) Chartered Insurance Advisor (CIA)

The Chartered Insurance Advisor program is designed as an in depth study of the profession

of insurance advisor wherein participants will gain knowledge in insurance, finance , investment,

insurance laws, innovative life and non-life insurance products, strategies in risk management schemes,

seeking claims, management techniques in attracting customers and means in creating potential and

reliability for the insurance profession according to accepted standards.

In 2012, the Institute organized two Insurance Advisor training programs namely Class 2/2012

and Class 3/2012 . Class 2 was a 78 hour training program attended by 11 participants held

between April 10-June 16, 2012. In addition to classroom seminars, Class2/2012 also engaged in a

fieldstudyatNavanakornIndustrialZone,Pathumthaniprovince,thefirstindustrialpromotionzone

in Thailand. Participants gained an understanding of planning and risk management schemes in the

eventoffloods,withtheopportunitytoobserveadisputesettlementbyarbitrationandanorganized

discussionon“Taxdeductionismorethanyouthinkwiththenewinsurancetrend”.


The Class 3/2012 Insurance Advisor 78 hour training program was held in November

20 - February 16, 2013 attended by 12 participants.

2) Thailand Insurance Leadership Program TheThailandInsuranceLeadershipProgram(Class2/2012)wasorganizedduringAugust-October2012 with the objective to have insurance administrators and executives of the public and private sector obtain a far-sighted and moral vision in insurance to help gear the industry towards prosperity as well as keep up with the social, economic and political trends of the world. Theprogramwasattendedby74participants,29fromtheinsurancesector,24fromthepublicsector,5fromthefinancialsectorand16othermemberswhogained immenseknowledgeandvaluableinformationonglobalinsurance,economicandfinancialinvestments,riskmanagement,aswell as the exchange of views and experiences from selected guest speakers.

Certificates awarded to participants of the Chartered Insurance Advisor Program (2nd session)

Thailand Insurance Leadership Program (Class 2/2012)

3) Educational resources Seek academic articles, publications, research papers and educational information on insurance,finance , financialmanagement both from local and international sources to serve as a source ofinformation for insurance personnel to increase their knowledge and expertise in insurance and other related subjects


Sector 5 : Appendix


Committee Inspection report

TheAuditCommitteeconsistsof3boardmembersappointedbytheOfficeofInsuranceCommissionnamely Mr. Kovit Poshyananda, chairman of the audit committee, Mrs. Tarisa Watanagase and Mr. PayungsakCharsuthipol, committee auditors and Mr. Kiattisak Khamsamarn, senior director of internal inspection, as secretary of the audit committee. The audit committee underwent a change in 2012 with the resignation of Mr. Narongchai Akraseni,honorary OIC committee member , who terminated his position in September 1, 2012. Mr. Payungsak was later appointed to take over his position as honorary committee member effective November 22, 2012. The audit committee was granted with the task of the overall inspection in compliance with regulationsof the OIC on roles, responsibilities and code of ethics. In 2012 the audit committee held a total of 4 meetingsattended by the internal audit department, the general administration department, and secretary of the committee assigned to conduct an assessment of internal control and risk management. The auditors were at liberty to perform their duties with the full cooperation of all divisions of the OIC, the work operations and inspection which can be summarized as follows: 1. Seek effective means for good corporate governance of the OIC in order to build reliability, trust andreputationbasedonthecontinualgrowthoftheOfficeoftheInsuranceCommission. 2Reviewtheeffectivenessofinternaloperationstoensurethatfinancialreportsareformulatedwithtransparency, suitability, accuracy and reliability 3. Examine the risk management, internal control systems and internal audit operations by engaging inregular meetings with internal auditors to review its progress and development. The State Audit Commission considers that the OIC has a risk management scheme and an internal control system that is adequate and canbetrustedtoreachitsobjectivesinmaintaininganeffectiveandefficientoperationsystemconformingtorules, regulations and conditions of the OIC. 4. Review OIC regulations regarding internal audit and internal inspection for objectivity, clarity, fairnessas well as review duties and responsibilities of auditors to ensure that they adhere to the framework ofoperations for better transparency and precision 5.Superviseinternalaudittoensureefficiencyandeffectivenessforthemaximumbenefitoftheorganization. The audit committee is to consider the objectivity of internal auditors, their work operations, audit reporting, audit revisions of important issues, as well as offer recommendations in the improvement of an effective organization. Consideration should be made for the approval of internal audit and budget 2013, number of personnel, as well as human resource development to ensure suitability and appropriateness. In sum, the Audit Committee has performed its duty in completion and is of the opinion that the OIC upholdsasoundandeffective internalcontrolmanagementsystemthatleadstoefficientworkoperationsconforming to governing rules, regulations and policies of the Insurance Commission . Financial statements are clear, accurate, disclosing appropriate information according to generally accepted accounting principles.

Kovit Poshyananda Chairman of the Audit Committee March 21 2013

Appendix


Financial StatementOffice of the Insurance Commission

Balance SheetAs of December 31, 2012

Unit : BahtNotes 2011 2012

AssetsCurrent assets Cash and cash equivalent 4.1 336,662,373.22 551,975,908.12 Short-term investments 4.2 1,503,057,870.08 739,247,408.18 Receivables 4.3 325,924,890.13 253,112,175.57 Other receivables 4.4 13,690,533.18 210,337.90 Prepaid expenses 4.5 5,894,784.00 6,314,513.35 Other current assets 4.6 10,843,675.69 8,746,572.90 Total Current assets 2,196,074,126.30 1,559,606,916.02 Non-current assets Long-term investments 4.7 168,427,000.00 201,000,000.00 Property,premise&equipment-net 4.8 333,246,333.51 375,599,505.54 Intangible assets –net 4.9 26,907,384.48 18,138,462.64 Other non-current assets 157,260.00 152,560.00 Total non-current assets 528,737,977.99 594,890,528.18 Total assets 2,724,812,104.29 2,154,497,444.20

Liabilities and equityCurrent liabilities Payables 7,656,640.06 39,532,360.80 Accrued expenses 4.11 17,893,996.93 27,085,498.77 Other current liabilities 16,258,243.58 17,178,686.30 Total current liabilities 41,808,880.57 83,796,545.87 Non-current liabilities Reserve for medical costs of retired staff 4.13 15,236,451.44 7,073,526.48 Capital compensation 4.13 181,439,210.46 112,427,769.80 Total non-current liabilities 196,675,661.90 119,501,296.28 Total liabilities 238,484,542.47 203,297,842.15 Equity Capitals transferred from the Department of Insurance 4.14 120,538,099.76 120,538,099.76

Initial capitals from the government 4.15 100,000,000.00 100,000,000.00 Retained earnings 2,265,789,462.06 1,730,661,502.29 Total equity 2,486,327,561.82 1,951,199,602.05 Total liabilities and equity 2,724,812,104.29 2,154,497,444.20

Note: Financial statements are part of these financial statements

.......................................................... ........................................................... (Mr.PravejOngartsitthigul) (Mr.ChuchatPramoolpol) Secretary General Assistant of the Secretary-General


Office of the Insurance Commission

Income Statement

For the Year ending December 31, 2012

Unit : Baht

Notes 2012 2011

Income

Contributions from insurancecompanies

3.1.1,4.16

1,166,020,097.16 964,813,761.55

Fee income from insurancecompanies

3.1.2, 4.17

216,752,628.00 202,302,990.00

Interest income 55,351,429.17 36,445,516.61

Other income 9,566,198.90 17,833,459.16

Total Income 4.4 1,447,690,353.23 1,221,395,727.32

Expenses

Personal expenses 4.18 687,150,261.46 612,446,364.19

Operating expenses 4.19 229,350,242.17 252,072,220.62

Remunerations of the committee and subcommittee

4.20 10,147,000.00 11,348,634.23

Total expenses 926,647,503.63 875,867,219.04

Gains for the year 4.21 521,042,849.60 345,528,508.28

Other comprehensive income for the year - -

Total comprehensive income for the year 521,042,849.60 345,528,508.28




Statement of Changes in Equity

For the Year ending December 31, 2012

Unit : BahtCapital transferred

from the Dept of

insurance

Initial Capital

from

government

Retained

Earning

Outstanding as Of Dec 31 2010 120,538,099.76 100,000,000.00 1,385,132,994.01

Net income for 2011 - - 345,528,508.28

Outstanding as Of Dec 31 2011 120,538,099.76 100,000,000.00 1,730,661,502.29

addrevisefiguresifrecordshow high expenses

- - 15,768,000.00

subtract revise if recordshowlowfigures

- - -1,682,889.83

120,538,099.76 100,000,000.00 1,744,746,612.46

Net income For 2012 - - 521,042,849.60

Outstanding as Of Dec 31, 2012 120,538,099.76 100,000,000.00 2,265,789,462.06



Office of the Insurance CommissionStatement of Cash Flows

For the year ending December 31, 2012

Unit : Baht

2012 2011

Adjustment to reconcile net profit to cash provided by work operations

Netprofit 521,042,849.60 345,528,508.28

Depreciation and amortization 73,657,049.95 88,875,668.29

Expenses from adjusted decrease of equipment use - 148,550.00

Sale of donated equipment 5.00 -

Income from donated items -2,752,897.50 -7,336,537.19

Income from interest -55,351,429.17 -36,445,516.61

Cash from interest 52,627,463.67 30,069,884.94

Profitfromworkoperationspriortoadjustmentincurrent capital

589,223,041.55 420,840,557.71

Increase or decrease in in operating assets and liabilities

Receivables(increase) -72,812,714.56 -10,890,843.48

Otherreceivables(increase)decrease -13,480,195.28 350,260.97

Prepaidexpense(increase) 419,729.35 -3,553,623.96

Othercurrentassetsdecrease(increase) 626,862.71 -901,111.20

Non-currentassets(increase) -4,700.00 -

Increaseinpayables(decrease) -31,875,720.74 32,551,720.92

Decrease in accrued expenses -9,191,501.84 -3,535,064.94

Increase prepaid contribution from insurance companies 79,683.56 102,316.44

Increase in arbitral tribunal payment 2,209,520.59 529,960.50

Increaseinperformancebond(decrease) (1,498,419.87) 7,798,578.91

Increaseincashreceivedinadvance(decrease) (107,702.00) 94,205.00

Deposits – decrease of deferred public revenue to the Comptroller’s General’s Dept.

- (307.87)

Corporation to the Ministry of Finance (1,603,525.00) 1,603,525.00

Increase in reserve for medical costs of terminated staff

8,162,924.96 7,073,526.48

Increase in cash deposit from Victims Compensation Fund

69,011,440.66 44,522,884.90

Net Cash in work operations 539,158,724.09 496,586,585.38


Unit : Baht

2012 2011

Cashoutflowfromshort-terminvestment (763,810,461.90) (421,983,057.83)

Cashinflowfromlongterminvestment(net) 32,573,000.00 -

Cashoutflowfrombuildingrenovation (2,560,382.39) (41,139,644.81)

Cashoutflowfrompurchasingequipment (4,003,630.70) (59,231,970.30)

Cashoutflowfromintangibleassets (16,670,784.00) (3,310,710.03)

Net cash from investment activities (754,472,258.99) (525,665,382.97)

Net increase (decrease) in cash and cash equivalent -215,313,534.90 -29,078,797.59

Cash and cash equivalent at beginning of period 551,975,908.12 581,054,705.71

Cash and cash equivalent at end of period 336,662,373.22 551,975,908.12




Operating Expenses

For the year ending December 31 2011 and 2010

Unit: Baht

2012 2011

Officesupplies-disposable 12,402,983.15 11,259,102.48

Fuel and oil 6,578,947.36 4,719,995.10

IEC materials 2,446,464.78 3,060,335.13

Other materials 1,265,296.30 903,717.48

Lease-Asset: Land and Building 13,136,876.00 11,760,716.00

Vehicle Rent 3,921,000.00 3,921,000.00

Reception and ceremony 163,772.98 133,935.97

Meetings and seminars 6,062,606.53 7,674,124.19

Travel expenses –domestic 4,289,704.17 4,048,865.15

Travel expenses –overseas 31,206,363.67 25,137,962.75

Membership fee-international insurance Institute 539,615.50 914,072.45

Consultation fees 5,623,387.10 3,280,161.29

Insurance premiums 1,106,903.49 1,755,006.62

Utilities 19,170,073.92 18,555,777.50

Depreciation and amortization 88,875,668.29 80,421,261.70

Audit expenses 300,000.00 300,000.00

Public relations expenses 33,015.00 483,590.00

Banking service fees 953,734.35 36,637.00

Outsourcing service 39,933,524.56 41,569,058.51

Asset repair and maintenance 2,501,701.04 1,845,608.47

Vehicle registration and taxes 471,038.22 1,050,435.45

Expenses from Money Expo Fair - 1,131,522.00

Expenses used in training agents/brokers 10,107,834.05 4,480,383.40

Miscellaneous 981,710.16 1,166,191.93

TOTAL 252,072,220.62 229,609,460.57


NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED 25 DECEMBER 2011-2012

...........................................

1. GENERAL INFORMATION

By virtue of the Insurance Commission Act, the Office of Insurance Commission(OIC) has

established on September 1, 2007 by changing its status from the Department of Insurance, Ministry

of Commerce. The OIC is a state agency which is not a government agency or state enterprise and is

under the supervision of the Ministry of Finance. Its roles and responsibility is to oversee and regulate

the insurance business to be in accordance with the insurance and customer protection principles.

2. BASIC PREPARATION OF FINANCIAL STATEMENTS

2.1Thesefinancialstatementshavebeenpreparedinaccordancewithgenerallyaccepted

accounting principles and in accordancewith the accounting system specified by theMinistry of

Finance whereby the accrual basis accounting shall be used.

2.2 Accounting period shall be the same as the calendar year, starting January 1 and ending

December 31 of each year.

2.3 Accounting standards

The OIC has not exercised the Accounting Standards 19 on employee benefits effective

January12011sinceaccordingtotheInsuranceCommissionActBE2550,theOICisnotunderthe

jurisdiction of the Labor Protection law, the Labor Relations law, the Social Security law, and the

Compensations law.

3. Significant Accounting Policies

ThefollowingaresignificantaccountingpoliciesusedinthepreparationoftheOICfinancial

statements

3.1 Recognition of revenues

3.1.1 Contributions fron non-life and life insurance companies are recognized as revenues

basedontheircontributionratespecifiedundertheNotificationoftheInsuranceCommissionRe:Criteria,

Procedures, and the Contribution rate to be sent by life and non-life insurance companies to the OIC,

effectingJanuary22,2008

3.1.2 Fee incomes are recognized as revenues once OIC receives fee payment

3.1.3 Income from the annual government budget are recognized as revenues after

the money has been transferred from the Comptrollers General’s Department to the OIC account.

3.1.4 Interest incomes are recognized as interest accrues based on the effective rate

method


3.2 Expense recognition

The expenses are recognized on accrual basis.

3.3 Land, building and equipment

Land are based on capital cost. Building and equipment are based on capital cost on

the purchase date or acquisition date deducted by the accumulated depreciation.

Buildings and equipment are recorded as assets with a service life of over 1 year and

their depreciation is calculated on a straight line basis over their estimated length of service time:

Building 20 years

Equipment 5years

Vehiclesandaccessories 5years

The adjustment of a leased building is recorded as an asset and the depreciation is

calculatedonastraightlinebasisovertheperiodspecifiedintheleasecontract.

Equipment transferred from the Department of Insurance are stated as net on the

transferred date after deducting the depreciating cost calculated according to above-mentioned guidelines

Expenses for expansion, renewal or improvement of assets, contributing to a substantial

increase in current replacement costs, will be included as capital cost of assets. Repair and maintenance

costs are recognized as expenses for a given accounting period.

3.4 Intangible assets

Intangible assets including direct expenses on the development of computer software

programs as well as expenses used in the purchase of packaged computer software programs under

thesupervisionof theOIC thatwillyieldeconomicbenefits foroverayear,arestatedatcost less

amortization. The amortization is calculated on a straight line basis to reduce the price on the accounting

books of each asset over the estimated service life of the given assets. The leaseholds are stated at

cost after deducting the accumulated amortization. The amortization is calculated on a straight line

basis over the period of the leasehold as follows:

Computersoftware 5years

Leasehold of building as per actual period but not exceeding 10 years

3.5 Materials under 5000 baht per unit on the purchase date can be considered as

expenses for the entire amount under the accounting period .

3.6 Estimated liabilities

The OIC will document the estimation of liabilities when such liabilities were developed

asaresultofapast incidentwhenthere is thepossibilitythattheofficewill losesomeeconomic

resources to resolve such liabilities, and when the value of such liabilities can be accurately estimated.


3.7 Non-current liabilities

3.7.1 eserved medical expenses for retired employees

3.7.2 Remuneration

3.8 Provident Fund

Member employees under the K Master Pooled registered fund

4. Additional information

4.1 Cash and cash equivalence comprises of:

Unit: Baht 2012 2011

Cash 6,100.00 394,759.39

DEPOSITS -currentaccount 833,600.00297,200.00

-savingsaccount 175,584,712.50 125,022,965.47

-3-monthfixedacct 160,237,960.72 426,260,983.26

TOTAL 336,662,373.22 551,975,908.12

4.2 Short-term investment comprises of:

Fixed deposits in the bank (5 month term but not exceeding 12) 1,503,057,870.08 baht

and739,247,408.18bahtrespectively.

4.3 Receivables

Receivables comprise of the non-life insurance and life insurance companies that need to

send levies to the OIC under the Insurance Commission declarations: Criteria, Procedures, and the

Levy Rate to be sent by the non-life and life insurance companies to theOffice of the Insurance

Commission2008.Thiscanbesummarizedasfollows:


Unit : Baht 2012 2011Receivables-non-lifeinsurancecompanies 118,628,506.17 91,150,720.26Receivables -life insurance companies 207,296,383.96 161,961,455.31 Total 325,924,890.13 253,112,175.57

4.4 Other receivables comprised of Unit : Baht 2012 2011Receivables–pettycash 455,309.68 71,700.40Receivables–finepaymentforviolatingtheOICAct 35,617.50 35,617.50Receivables(loans)–Floodreliefproject 13,195,180.00-Other receivables 4,426.00 103,020.00 Total 13,690,533.18 210,337.90

AsofDecember31,2012, total loan–Floodreliefprojectamountedto13,195,180.00BahtprovidedtoassistOICemployeesaffectedbyfloodsaccordingtotheresolutionofthe11thOICCommittee meeting in November 4, 2011 . Each employee is provided with a loan not exceeding 200,000.00 baht interest –free with a guarantor, to be paid back with 3 years from the date of loan. Employees requesting a loan should fulfill requirements outlined in OIC rules and regulationspertainingtofloodreliefassistancetostaffandemployeesaffectedbythefloods2011.

4.5 Prepaid Expenses Unit : Baht 2012 2011PrepaidExpenses-leaseofassets 4,814,439.11 5,054,377.45Prepaid Expenses - premium cost 1,080,344.89 1,260,135.90 Total 5,894,784.00 6,314,513.35

4.6 Other current assets comprised of Unit : Baht 2012 2011ComputerEquipment 274,248.49 901,111.20Accrued bank interest receivable 10,569,427.20 7,845,461.70 Total 10,843,675.69 8,746,572.90

4.7 Long-term investments AsofDecember2012and2011,thebalanceofthe1yearfixeddepositinthebankamountto427,000.00 and 201,000,000.00 baht respectively.


4.8 Land, Building and equipment-net

As of December 31, 2011 Land, Building and Equipment -Net are comprised of...

Unit : Baht

Cost price Accumulated Depreciation Land, Building and equip-ment-netTYPE

Beginning of period

Increase Decrease End of periodBeginning of

period Increase Decrease End of period

Land 7,748,818.00 - - 7,748,818.00 - - - - 7,748,818.00

Building 19,163,334.00 - - 19,163,334.00 2,098,221.36 958,166.70 - 3,056,388.06 16,106,945.94

Building ex-pansion and renovation

243,028,792.04 18,328,382.39 - 261,357,174.43 25,857,935.69 16,509,031.25 - 42,366,966.94 218,990,207.49

Building Ex-pansion and Renovation in process

45,244,239.19 2,043,267.83 90,152.17 47,197,354.85 23,070,698.68 8,829,479.25 90,149.17 31,810,028.76 15,387,326.09

Office Equip-ment

122,735,194.44 3,580,514.67 6,112.55 126,309,596.56 86,737,344.01 18,996,617.21 6,110.55 105,727,850.67 20,581,745.89

Vehicles 66,262,197.03 - - 66,262,197.03 28,931,197.70 11,578,469.03 - 40,509,666.73 25,752,530.30

Otherequipment

49,768,528.75 499,412.37 - 50,267,941.12 11,656,200.47 9,932,980.85 - 21,589,181.32 28,678,759.80

Total 553,951,103.45 24,451,577.26 96,264.72 578,306,415.99 178,351,597.91 66,804,744.29 96,259.72 245,060,082.48 333,246,333.51


Unit : Baht

Cost price Accumulated Depreciation Land, Building and Equip-ment -NetType

Beginning of Period

Increase Decrease End of Period Beginning of

Period Increase Decrease End of Period

Land 7,748,818.00 - - 7,748,818.00 - - - - 7,748,818.00

Building 19,163,334.00 - - 19,163,334.00 1,140,054.66 958,166.70 - 2,098,221.36 17,065,112.64

Building Expansionsand Renovations

196,464,147.23 46,564,644.81 - 243,028,792.04 14,201,109.12 11,656,826.57 - 25,857,935.69 217,170,856.35

Building Expansion and Renovation in process

5,425,000.00 - 5,425,000.00 - - - - - -

Office Equipment 44,081,666.99 1,162,572.20 - 45,244,239.19 14,129,545.33 8,941,153.35 - 23,070,698.68 22,173,540.51

Computer 109,087,153.79 13,796,590.65 148,550.00 122,735,194.44 64,175,185.38 22,562,158.63 - 86,737,344.01 35,997,850.43

Vehicle 42,067,934.03 24,194,263.00 - 66,262,197.03 17,304,137.21 11,627,060.49 - 28,931,197.70 37,330,999.33

Other Equipment 22,653,447.11 27,115,081.64 - 49,768,528.75 6,821,732.21 4,834,468.26 - 11,656,200.47 38,112,328.28

Total 446,691,501.15 112,833,152.30 5,573,550.00 553,951,103.45 117,771,763.91 60,579,834.00 - 178,351,597.91 375,599,505.54

As of year 2012 and 2011, the OIC has a depreciation of 65,121,854.46 baht and 60,579,834.00 baht respectively


4.9 IntangibleAssets -net

As of December 31, 2011, Intangible Assets and are comprised of… Unit : Baht

Cost price Accumulated DepreciationIntangible Assets -net TYPE

Beginning of Period

Increase Decrease End of PeriodBeginning of


SystemDevelopment

16,209,748.53 9,407,327.33 - 25,617,075.86 7,371,287.89 3,865,234.93 - 11,236,522.82 14,380,553.04

Back Office system

15,500,000.00 - - 15,500,000.00 6,200,000.00 3,100,000.00 - 9,300,000.00 6,200,000.00

Leasehold 64,135,090.00 7,896,790.00 - 72,031,880.00 64,135,088.00 1,569,960.56 - 65,705,048.56 6,326,831.44

Total 95,844,838.53 17,304,117.33 - 113,148,955.86 77,706,375.89 8,535,195.49 - 86,241,571.38 26,907,384.48

Cost price Accumulated DepreciationIntangible Assets -net TYPE

Beginning of Period

Increase Decrease End of PeriodBeginning of


SystemDevelopment

16,209,748.53 9,407,327.33 - 25,617,075.86 7,371,287.89 3,865,234.93 - 11,236,522.82 14,380,553.04

Back Office system

15,500,000.00 - - 15,500,000.00 6,200,000.00 3,100,000.00 - 9,300,000.00 6,200,000.00

Leasehold 64,135,090.00 7,896,790.00 - 72,031,880.00 64,135,088.00 1,569,960.56 - 65,705,048.56 6,326,831.44

Total 95,844,838.53 17,304,117.33 - 113,148,955.86 77,706,375.89 8,535,195.49 - 86,241,571.38 26,907,384.48

For the year 2012 and 2011, the OIC has amortization of 8,535,195.49 baht and 28,295,834.92 baht respectively


4.10 Payables

Unit : Baht

2012 2011

Payables-Non-lifeinsurancefunddeferredfinepayments - 624,686.25

Payables-LifeinsurancefundDeferredfinepayments 26,350.00 629,127.50

Payables–Levyfromlife 271,106.66 545,692.65

Insurancecompanies 1,561,787.961,409,532.22

Payables 5,797,395.44 36,323,322.18

Total 7,656,640.06 39,532,360.80

4.11 Accrued expenses

Unit : Baht

2012 2011

ContactPayment 7,091,455.55 8,530,239.51

Utilityexpenses 1,622,619.55 2,045,831.80

DeferredwithholdingtaxtoRevenueDepartment 3,315,875.80 3,098,029.06

RemunerationforearlyretirementProject - 4,851,930.00

Operating Expenses 5,864,046.03 8,559,468.40

Total 17,893,996.93 27,085,498.77

The 2010, the OIC implemented an early retirement project with 21 employees enrolled,

undertheamountofexpensesof39.43millionbaht.AsofDecember31,2011,theaccruedamount

payableisbalancedat4.85millionbaht.

4.12 Other current liabilities

Unit : Baht

2012 2011

Prepaidlevyfrominsurancecompanies 382,000.00 302,316.44

Arbitraltribunalpayment 6,790,973.09 4,581,452.50

Performancebond 9,052,118.49 10,550,538.36

Otherprepaidpaymentreceived 33,152.00 140,854.00

Dividends of reinsurance companies - 1,603,525.00

Total 16,258,243.58 17,178,686.30


4.13 Non-current liabilities

Unit : Baht

2012 2011

Reserveformedicalcostsofterminatedstaff 15,236,451.44 7,073,526.48

Remuneration of service costs in the past 181,439,210.46 112,427,769.80

Total 196,675,661.90 119,501,296.28

The Insurance Commission has agreed in principle to set up a budget for employees’ remu-

neration based on service costs in the past in order to serve as additional retirement allowance for

those transferred from the Department of Insurance and the Ministry of Commerce. The estimated

amountof679.05millionbahtand10%ofthisamountisgraduallyusedeachyear.AsofDecember

31,2012,theaccruedamountpayableisbalancedat181.44millionbaht.Inaddition,onAugust31,

2010 the Insurance Committee approved the establishment of a reserved medical cost for termi-

nated employees whereby 0.4% per year is deducted from their income at the end of the budget

year and employees who are monthly members of the project would be deducted 0.6% per year.

4.14 Capital transferred from the Department of Insurance

The Insurance Commission Act effective September 1, 2007, the Department of Insurance had

transformeditselftotheOfficeofInsuranceCommission(OIC),hencetransferringallworkoperations,re-

sponsibilities,assets,liabilities,rights,bindingsandotherobligationstotheOfficeofInsuranceCommission.

An audit committee was appointed by the OIC to assess all assets, liabilities and obligations whereby in the

periodof2009,theassessmentwascompletedinallaccuracyandcorrectness,thetotalamountofcapital

transferredfromtheDepartmentofInsurancewasshowninthefinancialstatementas120,538,099.76baht.

4.15 Initial capital from the government

In2008thegovernmentallocatedtotheOICtheamountof100,000,000bahtasinitialcapital


4.16 Levy from Insurance companies The Insurance Commission issued a declaration stating that insurance companies must deliver theirlevytotheOICstartingfromtheperiodof2008,Levyfrominsurancecompaniesarecomprisedof:

Unit: Baht 2012 2011Levyfromnon-lifeinsurancecompanies 456,034,892.35 370,767,261.08Levy from life insurance companies 709,985,204.81 594,046,500.47 Total 1,166,020,097.16 964,813,761.55

4.17 Fee Income from insurance companies Unit: Baht 2012 2011Applicationfeesforlicenseexamination 52,631,628.00 48,580,540.00Licenseissuancefees 50,238,900.00 49,070,800.00Licenserenewalfees 69,057,000.00 55,049,100.00Annualfeesforinsurancebusinessoperations 7,325,900.00 13,545,950.00Income from training fees 37,499,200.00 36,056,600.00 Total 216,752,628.00 202,302,990.00

4.18 Personnel Expenses Unit: Baht 2012 2011Salaries 509,492,702.43 445,166,556.70LevytoThaiProvidentFund 71,874,182.28 60,798,617.51Remunerationbasedonservicingcostinthepast 67,503,800.00 67,904,884.90Costoflivingallowance 12,366,283.88 12,112,836.56Specialallowance(SorPorPor) 205,583.33 197,500.00Overtimeandholidayworkpayments 163,490.00 34,900.00Professionalfees 1,055,000.00 820,000.00Educationalexpensesforemployees’children 1,097,513.00 878,725.50Healthcareexpense 11,527,044.53 11,489,456.01Employees’incometax–contributedbyOIC - 1,182,723.06Educationalexpensesforemployees 152,000.00 5,285,333.78Levyformedicalcostsofterminatedstaff 5,790,761.41 4,886,302.65เงินช่วยเหลือพนักงาน–ประสบอุทกภัย 2,833,347.00 -Premium for personal insurance 3,088,553.60 1,688,527.52 Total 687,150,261.46 612,446,364.19


4.19 Operating Expenses Unit : Baht 2012 2011OfficeSupplies–disposable 10,160,584.8212,402,983.15FuelandOil 7,274,995.16 6,578,947.36IECmaterials 1,577,508.52 2,446,464.78Othermaterials 1,329,564.47 1,265,296.30Lease-Asset:LandandBuildings 15,861,776.97 13,136,876.00Vehiclerentals 3,878,833.38 3,921,000.00ReceptionsandCeremonies 111,539.82 163,772.98MeetingandSeminars 9,031,413.36 6,062,606.53TravelExpense–domestic 2,863,873.97 4,289,704.17TravelExpense–overseas 7,145,175.59 31,206,363.67Membershipfee–InternationalInsuranceInstitute 753,500.00 539,615.50Consultationfees 1,386,387.10 5,623,387.10Insurancepremiums 2,979,685.76 1,106,903.49Utilities 20,935,443.87 19,170,073.92Depreciationandamortization 73,657,049.95 88,875,668.29Audit Expense 300,000.00 300,000.00PublicRelationsexpense 2,871,729.65 33,015.00Bankservicefees 2,179,077.57 953,734.35Outsourcingservice 42,699,976.32 39,933,524.56Assetrepairandmaintenance 3,339,268.98 2,501,701.04Taxes 4,248,394.35 471,038.22Expenses–trainingforinsuranceagents/brokers 14,098,231.43 10,107,834.05Miscellaneous 666,231.13 981,710.16 Total 229,350,242.17 252,072,220.62

4.20 Remuneration and Allowance for committees and sub-committees Unit : Baht 2012 2011Remuneration-InsuranceCommission 5,760,000.00 5,941,634.23MeetingCommissionInsuranceCommission 2,375,000.00 2,632,000.00Meeting allowance –other committees 220,000.00 167,000.00Meeting allowance–recruitment 320,000.00 212,000.00Meetingallowance–legalsubcommittees 644,000.00 1,532,000.00Meeting allowance – other subcommittees 828,000.00 864,000.00 Total 10,147,000.00 11,348,634.23


4.21 Performance Results Unit : Baht 2012 2011 เพิ่ม(ลด) %

Income 1,447,690,353.231,221,395,727.32 226,294,625.9118.53

Expenses 926,647,503.63 875,867,219.04 50,780,284.59 5.80

Net gains 521,042,849.60 345,528,508.28 175,514,341.32 50.80

In 2012, income of the OIC totaled 1,227,690,353.23 Baht while expenses totaled926,647,503.63Baht.Netgainsincreasedfromthepreviousyearby175,514,341.32baht,withnetgainsin2012and2011totaling521,042,849.60and345,528,508.28bahtrespectively.

4.22 Re-categorization SomecategoriesinthefinancialstatementsyearendingDecember31,2011havebeenre-arrangedtoconformtothe2012financialstatementasfollows:

Original New Amount Reserve of medical cost Other current Non-currentforterminatedemployees liabilities liabilities 7,073,526.48

Renumeration based on Outstanding Non-currentServicecosts Expenses liabilities 112,427,769.80

4.23 Approval of Financial Statements ThisfinancialstatementwasapprovedforissuancebytheSecretaryGeneraloftheOfficeofInsuranceCommissiononApril26,2013.

sector 1: organization · 2 sections: farmers pay 60 baht/rai and the government pays 69.47...

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