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