Non-life insurers adopt RBC

       So far, 34 non-life-insurance companies out of the 63 existing ones are employing the risk-based internaitonal standard for gauging capital adequacy, after the Office of the Insurance Commission set a 2011 deadline for compliance.
       "In 2011, risk-based capital will be used but not 100 per cent," Nittaya Piriyathamwong, director and secretary of the Insurance Premium Rating Bureau (IPRB), said yesterday.
       "It depends on the OCI whether they will be very strict about RBC. They can use it gradually and extend full compliance to five years," she said.
       The 34 general insurers, both large small, have started calculation their capital in line with the RBC, a model for the capital standard of insurers earlier used in Malaysia and Singrpore to ensure risks are managed.
       Insurance compaines are required to maintain capital in order to support possible or unexpected losses, ensure stability and financial strength, ensure their ability to cope with unexpected liabilities and provide better risk management.
       The risks for insurers include credit, market, liability, group, operating and liquidity risk.
       When the RBC trial run ends next month, the IPRB would send all the information on it to the OIC.
       According to the guideline, non-life insurers must maintain capital of at least 150 per cent or 1.5 times their policy liability. The OIC will provide advice for insurers whose capital is less than the requirement.
       Nittaya said unlike other businesses, the capital for insurers would be calculated based on unexpected liability. Thus, mostly it is calculated from experience and statistics.
       The remaining 29 non-life isurers do not disclose their figures to the OIC, but their financial strength will be finally evaluated along with the other insurers.