Article
Thai Non-Life Insurance Companies’ Resilience and
the Historic 2011 Floods: Some Recommendations for
Greater Sustainability
Kanitsorn Terdpaopong
1,
* and Robert C. Rickards
2
Citation: Terdpaopong, K.;
Rickards, R.C. Thai Non-Life
Insurance Companies’ Resilience and
the Historic 2011 Floods: Some
Recommendations for Greater
Sustainability. Sustainability 2021, 13,
8890. https://doi.org/10.3390/
su13168890
Academic Editor: João Carlos de
Oliveira Matias
Received: 7 May 2021
Accepted: 5 August 2021
Published: 9 August 2021
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1
Faculty of Accountancy, Rangsit University, Pathumthani 12000, Thailand
2
Department of Business Administration—Public Management, German Police University,
48165 Münster, Germany; rrickards@hs-harz.de
* Correspondence: kanitsorn@rsu.ac.th; Tel.: +66-81-809-5085
Abstract:
The severe flooding occurring in parts of Thailand in 2011 constituted the fifth most costly
catastrophe worldwide during the past 31 years. Many businesses suffered either directly or indirectly.
A sharp downturn in the country’s economy resulted, with Thai non-life insurance companies’ annual
losses totaling USD 4.1 bn. Focusing first on changes in their key performance indicators (KPIs)
as evidence of their financial resilience, this study analyses data for 58 companies from 2008–2010
(years prior to the flooding), 2011 (the flood year), and 2012–2014 (the immediate post-flood years).
Descriptive and inferential statistics depict differences in firm characteristics and key performance
indicators between these periods. The findings show that: (1) not surprisingly, the floods had a major
impact on Thai non-life insurance companies’ finances; and (2) even after two years, they still had not
recovered fully. Then, employing Data Envelopment Analysis (DEA), the study assesses the relative
efficiency of 58 Thai non-life insurance companies in using their assets to generate operating profit.
The evidence indicates that: (1) larger insurance companies are more efficient than smaller ones in
this regard; and (2) almost all the entities examined performed less efficiently during the post-flood
years than in earlier periods. These results serve as the basis for recommendations to Thai non-life
insurance companies, government policymakers, and future researchers. Although Thai non-life
insurance companies survived the challenges they faced during the study period, implementation of
the measures recommended here likely would boost their technical efficiency and financial resilience,
thereby facilitating their ability to operate more sustainably in the long run.
Keywords: resilience; sustainability; floods; non-life insurance; technical efficiency score
1. Introduction
Natural disasters have both direct and indirect effects on businesses, households,
infrastructure, and economies. Their direct effects may be either tangible and priceable
or intangible and unpriceable. Examples of the former include damage to residences,
facilities, and other property, while examples of the latter include fatalities, injuries, and
inconvenience. In contrast, indirect effects can refer to losses incurred by companies and
individuals outside flooded areas, such as adjustments in production and consumption
patterns and evacuees’ temporary housing costs. Indirect effects also may include societal
disruption, psychological trauma, and weakened trust in public authorities [1].
Floods are among the earth’s most common and most destructive natural hazards.
They occur frequently, constitute enormous socioeconomic challenges, and demand imme-
diate attention. The logic of risk management suggests countries should invest today to
safeguard critical infrastructure and centres of economic activity against future floods and
other climate-related losses of great magnitude. Moreover, there is a compelling political
logic to do so to generate employment and revive economic growth in disaster-affected
areas as soon as possible [2].
Sustainability 2021, 13, 8890. https://doi.org/10.3390/su13168890 https://www.mdpi.com/journal/sustainability
