The 7.7-magnitude earthquake that struck Myanmar and parts of Thailand on March 28 left significant cracks in high-rise buildings in Bangkok and surrounding provinces.
In addition to property damage, 15 fatalities were reported, 19 people were injured and more than 70 were still missing as of April 2 after the 30-storey State Audit Office, which was under construction, collapsed during the powerful quake.
While a week has passed since the earthquake rocked the capital, many condo owners are still hesitant to return to high-rise buildings due to safety concerns. Some will have to repair damaged property, but don't know how much of the damage is covered by insurance.
Another issue is the time it will take for insurers to process claims for a range of affected properties, including high-rise buildings, office towers, condos, hospitals and vehicles in Bangkok and other areas affected by the tremors.
Q: WHAT TYPES OF POLICIES COVER EARTHQUAKE DAMAGE?
Given the significant damage to lives and property, it is clear severe earthquakes are no longer a distant threat for Thailand.
When natural disasters occur, having insurance can help alleviate the financial burden and mitigate property damage to some extent.
According to the Office of the Insurance Commission (OIC), there are several types of insurance that cover earthquake damage.
1. Fire insurance for residential property
This policy covers earthquake-related damage of up to 20,000 baht per year, with an option to purchase additional coverage.
The OIC said there are 2.23 million active fire insurance policies for residential property in Bangkok and surrounding areas, in addition to 3.15 million active policies for residential property in other provinces. This totals 5.38 million active policies nationwide.
2. Condo insurance
Common property within condos is covered under industrial all risk (IAR) policies, protecting structural elements, elevators, stairwells, swimming pools, fitness centres, and other shared assets, subject to sub-limit conditions.
Individual condo owners are covered under residential fire insurance, which includes up to 20,000 baht in earthquake-related damage per year, with an option to purchase additional coverage.
3. Fire insurance for businesses and commercial property
This policy covers earthquake damage only if additional coverage has been purchased.
There are 452,716 active fire insurance policies for businesses and commercial property in Bangkok and surrounding areas, in addition to 661,806 such policies in other provinces. This totals 1.11 million active policies nationwide.
4. IAR insurance
An IAR insurance policy covers damage to buildings and the contents of commercial properties such as offices, hotels, schools, factories and other establishments caused by unforeseen events, including earthquakes, subject to sub-limit conditions.
There are 95,372 active IAR insurance policies in Bangkok and surrounding areas, and 99,017 active IAR policies in other provinces, totalling 194,389 active IAR insurance policies nationwide, according to the OIC.
5. Business interruption insurance
This policy covers financial losses resulting from business disruption due to property damage. Coverage includes lost revenue and net profit, operational expenses such as employee wages, office rent and factory lease costs. This must be covered under a fire insurance or IAR policy without any exclusions.
6. Construction insurance
For contractors and developers, this policy covers damage to construction, renovation work and installation projects due to unforeseen events, including earthquakes. The coverage includes civil engineering projects, machinery installation and third-party liability.
7. Auto insurance
Earthquake damage is covered only under Type 1 auto insurance. For Type 2, Type 3 and Type 5 (2+ and 3+), earthquake coverage must be purchased as an additional rider.
8. Personal accident insurance
This covers bodily injury and death caused by unforeseen events, including those resulting from earthquakes.
The OIC advised affected property owners to contact their insurers immediately and prepare relevant documents for consideration of compensation payment according to policy conditions, such as evidence of the damage, photographs, and other important documentation.
Chuchatr Pramoolpol, secretary-general of the regulator, said the OIC will ensure prompt and fair claims processing and settlement. An insurance assistance centre is available 24/7 through the 1186 OIC hotline and the chatbot @oicconnect.
He said Thailand's insurance industry remains financially robust as insurance companies transferred the majority of risk pertaining to collapsing buildings through reinsurance agreements with international partners.
If all the required documents are submitted, insurance companies typically take about 15 days to approve payment to policyholders for their claims, said Somporn Suebthawilkul, president of the Thai General Insurance Association (TGIA).
Q: WHAT IS THE COST OF THE DAMAGE?
While analysts expect the recent earthquake to cost the Thai economy between 20-30 billion baht, Mr Somporn estimates the total amount of insurance claim payments in the non-life sector to reach no more than 100 billion baht.
All the damage claims thus far have been for condos, commercial buildings and the State Audit Office building that collapsed on March 28. The estimate assumes all insured parties have not yet filed a claim, he said.
Most of the damage reports were claims for high-rise buildings such as condos, and only a few buildings sustained severe structural damage, while most low-rise buildings such as houses were not damaged during the tremors, said Mr Somporn.
"The rough estimate of the damage is likely to be less than the massive floods in 2011, for which insurers paid more than 400 billion baht, and Covid-19, for which insurers paid 150 billion baht," he said.
Policyholders in earthquake-affected areas should check their insurance policies to see if they include coverage for natural disasters. If they do, they should immediately notify the insurance company of the damage to ensure prompt compensation, said Mr Somporn.
Apisit Anantanatarat, president of Bangkok Insurance (BKI), said insurance companies are managing their risk, with reinsurance in place for amounts exceeding their individual capacity.
The residential insurance market is relatively small compared with the general insurance market.
Q: WHAT IS THE IMPACT FOR THE PROPERTY MARKET?
Vanida Geisler, a property analyst at KGI Securities (Thailand), said the worst earthquake in Bangkok in nearly 70 years has adversely affected the outlook for leading high-rise condo developers, such as AP Thailand, Supalai, Origin Property, Ananda Development, L.P.N. Development and Sansiri.
These developers need to manage around 550 projects under their responsibility to restore buyer confidence and maintain their reputation and brand image, she said.
However, prospective homebuyers may shift their interest to landed property under developers such as Land and Houses, Quality Houses and Pruksa Holding, said Ms Vanida.
In 2011 when Bangkok faced severe floods, listed property companies were under pressure for three months before a recovery began.
The current downcycle may be prolonged given the economic slowdown and sluggish property market, she said.
Phattarachai Taweewong, research and communication director at Colliers Thailand, said the earthquake presents a serious challenge to Bangkok's condo sector, which is already burdened by unsold inventory.
According to the Thai Condominium Association, property developers in the Greater Bangkok area were saddled with about 235,000 unsold residential units as of the end of last year, the largest amount since 2018. Sales slumped 37% to about 53,000 units in 2024.
"We've seen some condo buyers temporarily pause their search," said Pierre Lung, sales director at real estate platform PropertyScout, as quoted by Bloomberg.
"A number of buyers are now more hesitant when it comes to high-rise buildings, especially new projects."
Surachet Kongcheep, head of research and consultancy at property consultancy Cushman & Wakefield Thailand, said the extent of cancellations would depend on which developers have more visible damage and which ones can quickly restore confidence and take responsibility for repairing the buildings.
Q: HOW DOES THE SECTOR VIEW NATURAL DISASTER RISK?
Mr Somporn said as the risk of earthquakes and other natural disasters has intensified, TGIA anticipates free earthquake coverage will no longer be offered, and earthquake insurance is expected to be separated from fire insurance policies.
Disaster premiums are also likely to increase, along with higher deductible rates to reflect the growing risk, he said.
In the past, insurance companies often bundled natural disaster coverage, such as coverage for earthquakes and floods, with fire insurance policies for buildings, high-rise buildings and residential homes as a strategy to lift sales, said Mr Somporn, who is also chief executive of Dhipaya Group Holdings.
"This change underscores that severe natural disasters such as earthquakes are no longer remote possibilities," he said.
"They can cause immense damage to both life and property. As a result, TGIA and its members must reassess and adjust their strategies to effectively manage these growing risks."
One potential measure is to introduce standalone earthquake insurance policies, increase disaster insurance premiums, and adjust deductible rates.
For instance, Dhipaya Insurance applies a 20% deductible on structural insurance for many high-rise buildings, which may rise to 30% or be adjusted based on project-specific risks, said Mr Somporn.
Mr Apisit of BKI said the insurance industry is urging policyholders to review their coverage and understand the terms and conditions of their policies to ensure they are adequately protected against future natural disasters.
Other pundits say natural disasters are unpredictable, making insurance a crucial risk management tool to minimise potential damage to life and property.
These analysts said the recent earthquake should raise public awareness of the importance of insurance, encouraging businesses to reassess their disaster risk management strategies.
Events that were previously considered unlikely may need to be re-evaluated in terms of insurance coverage and premium pricing to reflect actual risk, according to the analysts.
"Earthquakes and other more frequent natural disasters in Thailand such as floods and storms increase awareness among consumers and corporations of the need for adequate protection," said Lars Heibutzki, chief executive of Allianz Ayudhya General Insurance.
