Thai Non-Life Insurance Companies’ Resilience and the Historic 2011 Floods: Some Recommendations for Greater Sustainability

Abstract

The severe flooding occurring in parts of Thailand in 2011 constituted the fifth most costly catastrophe worldwide during the past 31 years. Many businesses suffered either directly or indirectly. A sharp downturn in the country’s economy resulted, with Thai non-life insurance companies’ annual losses totaling USD 4.1 bn. Focusing first on changes in their key performance indicators (KPIs) as evidence of their financial resilience, this study analyses data for 58 companies from 2008–2010 (years prior to the flooding), 2011 (the flood year), and 2012–2014 (the immediate post-flood years). Descriptive and inferential statistics depict differences in firm characteristics and key performance indicators between these periods. The findings show that: (1) not surprisingly, the floods had a major impact on Thai non-life insurance companies’ finances; and (2) even after two years, they still had not recovered fully. Then, employing Data Envelopment Analysis (DEA), the study assesses the relative efficiency of 58 Thai non-life insurance companies in using their assets to generate operating profit. The evidence indicates that: (1) larger insurance companies are more efficient than smaller ones in this regard; and (2) almost all the entities examined performed less efficiently during the post-flood years than in earlier periods. These results serve as the basis for recommendations to Thai non-life insurance companies, government policymakers, and future researchers. Although Thai non-life insurance companies survived the challenges they faced during the study period, implementation of the measures recommended here likely would boost their technical efficiency and financial resilience, thereby facilitating their ability to operate more sustainably in the long run.

Determinants of operational efficiency on the financial health of non-life insurance companies in South Africa

“…The results are in line with those from Pakistan, Takaful, Ethiopia, Nigeria, and Egypt (Batool & Sahi, 2019) However, a company's size has a little impact on how well it performs (Husna & Satria, 2019). Before the total asset's logarithm is used as a guide for insurers, it is difficult to determine the exact size of insurance companies (Terdpaopong & Rickards, 2021).…”

Corporate water risk: A new research hotspot under climate change

“…According to the keywords in those clusters, seven popular topics in the field of corporate water risk research can be summarized as follows. Corporate performance under climate change. It includes researches on evaluation on natural disaster or rare disaster (Serinaldi et al, 2018), investment choices under climate change (Ryu et al, 2017), corporate environmental, social or financial performance (Lambooy, 2011; Terdpaopong & Rickards, 2021), and so forth. For example, Schoppa et al (2020) constructed a multivariable probabilistic model successfully identify and reproduce essential relationships of flood damage processes in the data for companies.…”

Strategic Capabilities for Enhancing the Flood Resilience of Business Premises: An Expert Review and Lessons from Case Studies

“…In such instances, based on experiences in the UK, and others, the possession of some capabilities does limit business premises and asset damage thereby speeding up business recovery [7]. To this end, Saito [8] highlighted the need to adopt flood risk management systems that shield against climate change impacts, Terdpaopong and Rickards [9] highlighted the need for company resilience to flooding for greater sustainability, Asgary [10] and Skouloudis et al [11] discussed SMEs flood resilience and asset protection challenges, while Ogie et al [12] provided some information meant to help decision making on hydrological infrastructure assets. In relation to achieving organisational goals which include managing and surviving climate events such as flooding [13,14], Yen-Tsang, Csillag, and Siegler [15] described the need for capabilities.…”