Huge sums of money will be needed to compensate Thai owners for damage done to Phnom

Penh, but government officials said insurance companies would likely foot a significant

part of the bill.

The Ministry of Economy and Finance (MEF) said it was too early to state how much

that compensation would be, but insisted the government was not obliged to pay for

all of it. That would be a responsibility shared with insurance companies.

"The Cambodia government will not pay for the destruction [of privately insured

property]," said Minh Ban Kosal, deputy director of the Financial Industry Department

at MEF. "Insurance companies will have to pay."

The Thai government has demanded that the Cambodian government offer "full compensation

for all losses incurred by the Royal Thai Government" and its citizens. The

losses include a shattered Embassy, two looted or burned hotels and numerous destroyed

businesses. The value was put at $23 million by the Thai government.

Kosal indicated that MEF "could intervene in the market" if companies failed

to follow through on their commitments. He said both local and foreign-owned insurance

companies would be involved.

"It's a big, big problem," said Kosal. "But we need time to assess

what was destroyed. Cambodian [insurance] companies have to pay, but they're not

responsible for all [of it]. We share the risk with reinsurance companies."

Under Cambodian law, reinsurance companies are required to cover any assets insured

for more than $500,000. The strategy is designed to spread risk.

With only one reinsurance company operating in Cambodia, many payouts may come from

companies with majority shareholders in countries like Malaysia, England, Switzerland

and Thailand. Two insurance executives here said many Thai businesses were actually

insured by companies with a significant Thai ownership.

The executives disputed that they might be responsible for a large percentage of

the damages. Philippe Lenain, managing director of Indochine Insurance, said only

if a business had taken out Strike, Riot, and Civil Commotion (SRCC) insurance, would

an insurance company have to pay claims for damage of the kind that occurred January

29.

Although some of Indo-chine's clients had the policy, none were damaged by the violence,

he said.

While insurance companies commonly offer SRCC coverage, not all companies take it.

In times of war or unrest, such provisions are often popular, but they are expensive.

After post-election riots in 1998, many clients asked for this SRCC coverage.

"I think a lot of clients will ask for [SRCC]," Lenain said. "We can

provide it, it's just a matter of pricing."