The recent road collapse caused by a sinkhole in front of Vajira Hospital has drawn attention to insurance coverage for large-scale construction projects in Bangkok, with industry executives saying rising risks in the capital could push up premiums for large projects in the future.
The incident occurred near the future Vajira Hospital Station, prompting the Mass Rapid Transit Authority of Thailand to order a temporary halt to construction on the project, which is part of the new MRT Purple Line.
According to industry sources, the project was insured for a combined value of 19.4 billion baht by three major insurers: Bangkok Insurance (BKI) (40%), Dhipaya Insurance (40%), and Muang Thai Insurance (20%).
The policies cover assets under construction, machinery, third-party property damage, and accidents affecting external parties. The cause of the collapse, whether due to a water pipe leak or ongoing construction, remains under investigation.
If construction is found to have been the trigger, liability is covered by the project’s insurance policy.
BKI chief executive Apisit Anantanatarat said despite the recent incident, insurers expect more large projects to proceed under government stimulus measures, including high-speed and dual-track rail developments. They said rising risks mean “higher premiums are likely”.
Global reinsurers have reduced renewal premiums over the past 2-3 years, increasing insurers’ profitability.
“With disaster risks in Thailand rising, reinsurance costs, particularly for excess of loss coverage, are expected to climb,” said Mr Apisit.
For instance, BKI’s earthquake protection covers up to 5 billion baht per event, with reinsurers absorbing 4.9 billion baht and BKI 100 million. To strengthen resilience, he said BKI topped up its protection to 8 billion baht, though this added 400 million baht in costs this year, weighing on profits.
Flooding in October also poses a major concern, with forecasts pointing to water levels comparable to 2011. This could trigger a spike in auto claims, particularly for electric vehicles (EVs), which carry higher risks.
BKI is the only insurer to expand its catastrophe coverage to 8 billion baht this year, the highest level in the industry, said Mr Apisit.
GROWTH AMID HEADWINDS
Thailand’s insurance sector faces headwinds from the economic slowdown caused by sluggish exports, a high level of household debt, and the impact of cheaper Chinese imports on small local producers. GDP growth is projected at less than 2% this year.
Against this backdrop, the insurance industry grew 3% in the first half of the year, with full-year growth forecast at 1.5-2%. Government stimulus programmes such as the 60-billion-baht “Khon La Khrueng” co-payment scheme are expected to provide a temporary boost.
Auto insurance remains a key driver, with total car sales estimated at 600,000 units. EV sales have surged nearly 40% year-on-year in 2025 to around 120,000 units, lifting the demand for insurance. However, BKI’s motor insurance portfolio contracted by 5% as the company avoided aggressive price competition in the high-risk EV segment.
Fire insurance is expected to expand by 1% in the second half, while large projects such as the 200-billion-baht high-speed rail linking three airports, dual-track railways, and new data centres are set to support premium growth.
BKI targets premium growth of 2.6-3% in 2025 and 5-6% by 2026, though the short government tenure (4-8 months) limits near-term economic recovery.
With exports and tourism, traditional growth engines, remaining weak, Thailand’s economy is likely to see subdued growth over the next 2-3 years, said Mr Apisit.