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Thai Law Insights

Terrorism and Its Effects on Insurance: Observations from a Thai Law Perspective

Ratirat Ekjittapichet

Thailand is in an unprecedented state of political unrest. Buildings have been burned, property has been irreversibly damaged, and businesses have faced numerous obstacles in continuing operations as usual, all due to politically motivated destruction. As a result, concerns have arisen regarding whether insurance policies cover acts of terrorism and how terrorism is defined under such policies.

Acts of terrorism are not covered by general insurance policies (e.g. all risks coverage, business interruption insurance) and demand additional coverage at an additional cost to the insured. Consequently, insurers have refused to pay compensation to the businesses that have sustained damage as a result of such acts. However, insured businesses may be able to seek indemnification for certain acts by avoiding their characterization as terrorism.

Legal scholars and judges have continually debated issues on terrorism and its coverage in insurance policies and are currently forming the jurisprudence on the issue. The Court of First Instance held that a fire set in close proximity to a political rally held by Red Shirts in 2010 was not an act of terrorism because (1) no person or organization confessed to the crime or any political motivations behind the crime, (2) the incident did not provoke fear for the public, (3) the incident did not cause significant damage to Thailand’s economy, and (4) no political demands were made, as the incident occurred after the protest. Without proof that such destruction was politically motivated, such destruction escaped the label of terrorism. Additionally, the Thai Criminal Code defines terrorism as any act that endangers life, causes serious bodily danger, causes serious damage to the public transportation system, telecommunication system, or infrastructure system, causes damage to property, or causes material economic damage that is done with the intent to terrorize or force the Government to take action or not take action which may cause serious damage or a disturbance. The Supreme Court of Thailand may soon have an opportunity to evaluate whether the acts of arson committed after the political rally constitute terrorism, but the Supreme Court’s decision will remain only persuasive, not binding, authority in shaping how terrorism is defined.

The law on terrorism’s effects on insurance in Thailand is a topic of discussion that has become increasingly relevant in these times of political instability and is still evolving under the guidance of legal professionals.