Flood coverage offered with KBank loans

Kasikornbank plans to offer flood insurance for mortgages from next year for a higher premium.

The bank will work with its insurance partner, Muang Thai Insurance, to develop flood insurance products in addition to its fire policies. Fire policies also cover typhoons, earthquakes, hail and riots on sliding risk scales.

The flood insurance would be offered from Jan 1, said first senior vice-president Chatchai Payuhanaveechai.

Flood protection would be in the range of 20,000 to 50,000 baht depending on the sum insured, and coverage can be increased up to 20% of the appraised value per house.

"For example, a home buyer has to pay the required fire insurance of around 500 to 1,000 baht per year for a one-million-baht house. That customer would pay an additional premium of 279 baht per year for flood protection of 50,000 baht," he said.

Existing mortgage holders can add flood insurance if the insurance company allows it. Since many people have suffered from the floods, demand for the insurance has increased, he said.

KBank projects retail loan growth of 8% this year, down from an earlier target of 15%, because of the floods. It expects sluggish housing-loan expansion into the first half of next year because of the concentration on recovery.

Housing loan growth in the first half next year will be focused mainly on rehabilitation. KBank has special packages, offering no interest for six months followed by the minimum lending rate. It offers a 15-year loan period, the longest for this type of debt, he said.

Senior executive vice-president Krisada Lamsam said the bank would provide extra financial packages to ease the financial burden for flood-affected customers, offered in three steps. 

The first step is to survey the losses, the second is business rehabilitation and the last is comprehensive financial support.

With assistance, the bank forecasts the manufacturing sector will be back to normal from the second quarter next year.

Financial measures include a grace period of up to 12 months, extension of loan maturity, and additional credit of up to 100%. Low interest rates for affected SMEs and individual customers will also be offered. The financial conditions of each applicant will be considered on a case-by-case basis.

Mr Krisada said KBank was also working with the Japan Bank for International Cooperation and its partners to provide financial support to affected customers. Six Japanese financial institutions have so far been offering assistance packages.

Bank of Ayudhya is also offering financial assistance based on cash flow, allowing new loans to help customers restart their businesses or continue normal operations.

Offers are based on the severity of the damage to assets and cash flow and each customer's track record.