Nov. 30 (Bloomberg) -- Thailand may set up a public fund to help insurers cope with the nation’s worst flooding in seven decades, the head of government’s reconstruction committee said.
“Government participation in the insurance industry for a big catastrophe like this may be necessary,” former Finance Minister Virabongsa Ramangkura said in an interview yesterday in Tokyo. “It is too early to say what kind of model is suitable for Thailand, but we have to look into it seriously.”
Thai officials are meeting Japanese government and company representatives to reassure them their country remains a safe place to do business after floods that killed more than 600 people and caused an estimated 400 billion baht ($12.8 billion) in damage. Japanese companies such as Toyota Motor Corp. and Honda Motor Co. are Thailand’s biggest foreign investors.
Trade and Industry Minister Yukio Edano asked the Thai government to provide public assistance for Japanese insurers in a Nov. 28 meeting with Deputy Prime Minister Kittiratt Na-Ranong in Tokyo. Virabongsa said that it may be more than a year before a public fund is approved by parliament and any taxpayer burden must be minimized.
“But it has to be sufficient to give confidence that the private companies can run their businesses,” he said. “We have to be fair to both the taxpayers and the businesses.”
Japan’s top three non-life insurers cut their full-year earnings forecasts, citing higher-than-expected payouts from the flooding in Thailand and other natural disasters.
MS&AD Insurance Group Holdings Inc. lowered its full-year net income forecast by 91 percent to 6 billion yen ($77 million) after 130 billion yen in payouts for the Thai disaster. Tokio Marine Holdings Inc. expects flood payouts of 100 billion yen and NKSJ Holdings Inc. 30 billion yen.
Virabongsa said negotiations between insurance companies and claimants this year “will be tough,” adding that the situation should improve next year and the year after.
Thailand last week revised down its 2011 economic growth forecast to 1.5 percent from as much as 4 percent. The National Economic and Social Development Board said the damage may reach 300 billion baht, while Barclays Plc estimated as much as 400 billion baht, or 4 percent of gross domestic product.
Honda said earlier this week it has completed draining water without giving a date for resuming production in Thailand. Suzuki Motor Corp. said it will resume partial production of motorcycles starting Dec. 1.
--With assistance from Suttinee Yuvejwattana in Bangkok and Takashi Hirokawa in Tokyo. Editors: John Brinsley, Tony Jordan
To contact the reporters on this story: Sachiko Sakamaki in Tokyo at email@example.com; Komaki Ito in Tokyo at firstname.lastname@example.org
To contact the editor responsible for this story: Peter Hirschberg at email@example.com