Thailand’s Regulator Launches Stress Test Plan to Enhance Stability of Insurance Business
Bangkok, March 13, 2025 – Thailand’s Office of Insurance Commission (OIC) has outlined its framework for the 2025 OIC Stress Test, targeting both life and non-life insurance companies. The initiative aims to assess the stability of the insurance sector under simulated risk conditions.
The OIC’s stress test, explained by Ayusri Khambanlue, Assistant Secretary-General of the Regulatory Standards Development Division, is a top-down scenario analysis designed to evaluate potential system-wide impacts. This includes analyzing potential financial instability and systemic risks. The OIC is collaborating with the Bank of Thailand and the Securities and Exchange Commission to provide a comprehensive assessment of the Thai financial landscape.
In the upcoming year, the stress test will zero in on both insurance-specific and broader economic risks. These include the effects of U.S. economic policy, geopolitical uncertainties in the Middle East, and the worldwide economic slowdown, all of which have implications for the Thai economy.
Adverse scenarios under consideration include economic recession, decreased income levels, higher inflation caused by increased labor and parts costs, and the effects of climate change on public health. Climate change could lead to increased medical expenses and a greater frequency and intensity of natural disasters.
Dr. Ayusri stated, “The OIC has created a method for determining risk factors to improve the accuracy of the assessment, using each company’s business profile, which is based on the Internal OIC Model: Customized Parameters. Insurance companies participating in the test must consider all factors related to their business, using historical data, actuarial models and forward-looking considerations. Our goal is to strengthen the financial stability (solvency) and liquidity of the insurance business sector.”
She further emphasized, “The OIC Stress Test is part of our ongoing preventive supervision approach, which is designed to help insurance companies manage various risks and bolster confidence in the Thai insurance system for the long term.”
