The Thai General Insurance Association (TGIA) is backing an initiative to establish a permanent Natural Catastrophe Fund for the country in the first half of 2026, and is currently exploring the use of catastrophe bonds as a form of reinsurance capital to help support the fund, according to a report by the Bangkok Post.
According to the report, TGIA wants to establish the nat cat fund amid increasingly frequent and severe natural disasters events within the country, with an initial sum of 50 billion baht (approximately $1.60 billion).
TGIA president Somporn Suebthawilkul told Bangkok Post that complete implementation of the fund is anticipated in 2027, and it is expected that the fund will enhance long-term risk management within the industry.
As mentioned, this domestic fund could potentially interact with or leverage international capital markets, including catastrophe bonds, in the future.
Thailand has begun to transition from being a low-risk country for natural disaster events, to experiencing considerably increased risks of catastrophe.
Major events have affected Thailand throughout 2025, including severe flooding in Hat Yai in November 2025, and a powerful earthquake, centered in Myanmar, in March 2025.
As of December 15, insured losses from the Hat Yai floods have totalled 16 billion baht (approximately $505 million), which includes 12.5 billion baht in motor insurance claims and 3.51 billion baht in non-motor losses.
“The catastrophe fund will be a permanent mechanism, unlike the temporary fund established after the 2011 floods. Natural disasters are occurring more frequently and with greater severity, making long-term risk preparedness essential for the non-life insurance industry,” Suebthawilkul explained to Bangkok Post.
The nat cat fund will reportedly be financed through three main sources, comprising a catastrophe bond fund, insurance premiums, and reinsurance.
Government support will include short-term bond issuance with maturities of 1-3 years, offering attractive returns to investors. Suebthawilkul also explained that if no major disaster occurs, investors will receive competitive returns.
As well as this, Suebthawilkul noted that TGIA has also called on the government to provide additional support in the event of extreme disasters beyond the industry’s capacity.
“The permanent catastrophe fund is critical to maintaining financial stability and confidence in the insurance sector, as Thailand is increasingly classified as a high-risk natural disaster zone,” added Suebthawilkul.
Furthermore, the nat cat fund is anticipated to enhance bargaining power during reinsurance negotiations.
Suebthawilkul explained that pooling risks through a large-scale fund would ultimately help improve negotiating strength, whilst adding that the fund will be managed by professional fund managers to ensure transparency and effective governance.
Bangkok Post also reported that establishing a disaster insurance fund to absorb large-scale losses is also under consideration, in conjunction with improved risk allocation, shared industry databases and market agreements, as well as more effective reinsurance management to transfer risks globally.
“These measures are essential to ensuring the long-term sustainability of Thailand’s non-life insurance industry in an era of rising climate and disaster risks,” added Suebthawilkul.
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