By: Ian Johnston, Sorawat Wongkaweepairot, Nuttida Doungwirote and Niti Wanichworranan

At a glance

• Maximum rainfall during the 2025 floods has exceeded the 2011 catastrophe, with peak rainfall of 639mm (19-21 November 2025) surpassing 2011’s maximum of 428mm, marking the heaviest rainfall in Thailand in three decades.
• The 2011 floods caused over USD 15 billion in insured losses and exposed critical gaps in coverage and conditions, particularly Contingent Business Interruption (CBI), limited peril extensions and inadequate sub-limits.
• Insurers handling 2025 flood claims should review CBI policy terms, address interpretation ambiguities around prevention of access clauses, and prepare for substantial uninsured loss disputes.

Introduction

Thailand is experiencing its most severe flooding event in over three decades. Accumulated rainfall between 19-21 November 2025 reached 639mm, substantially exceeding the 2011 peak of 428mm and representing the heaviest rainfall phenomenon in several decades. For insurers operating in Thailand or covering Thai risks, the scale of the 2025 event raises the possibility of substantial claims, though the ultimate loss quantum will depend on factors including flood duration, affected industrial areas, and the effectiveness of flood defence improvements implemented since 2011.

The 2011 floods lasted over five months, inundated seven major industrial estates, and resulted in the largest insured catastrophe loss in Thai history, with total insured losses exceeding USD 15 billion. From a coverage perspective, they exposed fundamental structural deficiencies in Thai commercial insurance policies, particularly in contingent business interruption extensions.

This article examines the principal coverage issues that emerged from 2011 claims, with particular focus on lessons learned in handling CBI claims and provides practical guidance for insurers now facing what appears to be an even more severe flooding event.

The 2011 experience: key coverage issues

Limited Perils in CBI Extensions

The most significant coverage gap revealed by the 2011 floods related to the scope of perils covered under contingent business interruption extensions. Our experience in 2011 involved identifying critical gaps in policies that generated substantial uninsured losses, where brokers and insureds expected policy cover.

Many Thai commercial policies were written with primary property damage and business interruption cover on an All Risks basis, providing broad protection for direct losses. However, CBI extensions covering suppliers, customers, and supply chain disruption were typically written on a limited perils basis, covering only fire, lightning, and explosion.

When the 2011 floods caused widespread supply chain disruption across Thailand, policyholders discovered that their CBI extensions provided little to no coverage for flood-related supply chain losses. Facilities that had comprehensive flood coverage for direct damage to their own premises found themselves entirely uninsured for business interruption losses arising from flood damage at suppliers’ or customers’ locations.

Given the interconnected nature of Thai manufacturing, particularly in the automotive and electronics sectors concentrated in industrial estates, supply chain disruption often exceeded direct physical damage losses. The limited perils restriction in CBI extensions meant that policyholders faced substantial uninsured losses despite holding what they believed to be comprehensive commercial insurance.

Prevention of Access: Interpretation Issues

Prevention of access clauses typically provide coverage where business interruption results from damage to property in the vicinity of insured premises preventing or hindering access. The interpretive question that dominated 2011 disputes was whether, for example, a flooded road constituted a “damaged road” within the meaning of standard policy wordings.

Where policy language specifically referred to “damage” to property in the vicinity, it could be argued that water lying on the surface of a road was a temporary condition rather than physical damage to the road itself. Water would eventually recede, leaving the road structure intact and therefore no “damage” had occurred to trigger coverage. Damage definitions relating to physical loss, destruction or damage did not extend to cover temporary inhibitions.

In the absence of a definition, the argument could be made that the ordinary commercial meaning of “damage” encompassed any condition that prevented the property from serving its intended purpose or inhibited its value – an argument made more persuasive after some recent judgments in the USA. A road rendered impassable by flood water was effectively damaged for the duration of the flooding, regardless of whether the road structure itself was physically altered and had lost value.

Insurers should review their prevention of access provisions carefully to determine whether coverage requires “damage” to property or uses broader language such as “prevention of access” or “interference with access.” The specific wording will determine the coverage position and should be assessed before claims crystallize. Where ambiguity exists, early legal advice on the interpretation under Thai law will be helpful.

Restricted Indemnity Periods for CBI Extensions

The prolonged nature of the 2011 floods exposed another structural limitation in Thai commercial policies: restricted indemnity periods for specific CBI extensions.

CBI extensions such as loss of attraction, and prevention of access typically contained express limitations on the duration of coverage, commonly 30 days from the date of damage.

During 2011, flood waters in affected areas remained in place for more than 90 days in many locations. Industrial estates that were flooded in October 2011 did not fully drain until January 2012. Supply chain disruption persisted even longer as affected facilities required extensive remediation before resuming operations.

Sue and Labor, Loss Minimization and Reasonable Precautions clauses

Sue and Labor clauses and variations on them were few and far between in 2011. There was still a frustrating mix of insureds who had taken flood prevention measures but could not recover costs of such action and insureds who had covered such costs but took no action. Given that such preventive action usually benefited insurers, consideration of pre-approval of such costs was to the benefit of all involved.

Arguments over the ambit of Minimisation and Reasonable Precaution clauses were also rife, but these were generally clauses that related to action after a loss had been suffered.

Trends Clauses

Trends clauses provided that, when calculating loss, adjustments were made to allow for trends which would have affected the business had the damage not occurred “so that the figures thus adjusted shall represent as nearly as may be reasonably practicable the result which but for the Damage would have been obtained during the relative period after the Damage“.

Following the Orient Express Hotels v Generali case, this led many to look at situations where there were two proximate causes of loss and apply a ‘but for’ test as to whether the business would have been affected but for the indemnified damage. In many wide area damage scenarios this led to a reduction in cover.

Considerations for 2025 flood claim handling

Given that the 2025 rainfall has already exceeded 2011 levels, insurers should conduct immediate targeted reviews of potentially affected policies, focusing specifically on:

• CBI extension structure: Identify which policies contain limited perils CBI extensions that exclude flood coverage. It can be expected that these policies may create coverage disputes and require early engagement with policyholders about the scope of uninsured losses.
• Prevention of access language: Review the specific wording of prevention of access provisions to determine whether they require “damage” to property or use broader language such as “obstruction” or “interference.” The precise language will determine coverage positions and should be assessed before claims crystallise.
• Sub-limit adequacy: Quantify CBI sub-limits in relation to the policyholder’s actual supply chain exposure. Where sub-limits are clearly inadequate, early communication about coverage limits helps manage expectations and prevents subsequent disputes about exhaustion.
• Indemnity period restrictions: Identify policies containing express time limitations on CBI extensions. Insurers should anticipate extended disruption periods and assess whether time-limited extensions will exhaust before recovery is complete.
• Loss prevention clauses and whether these will provide cover for proactive measures or affect recovery of losses.
• Trends clauses: the UK COVID-19 judgments have overturned the Orient Express Hotels case such that interpretation would likely be more inclusive of loss in 2025 than 2011.

Implications for insurers and clients

For insurers, the key priorities are early identification of coverage limitations, proactive communication with policyholders about scope of cover, and preparation for disputes over CBI extension interpretation. The limited perils basis of many CBI extensions may generate substantial uninsured losses and associated friction with policyholders who believe they hold comprehensive coverage.

For policyholders, understanding the specific structure of CBI extensions in their policies is essential. The All Risks basis of primary coverage does not necessarily extend to supply chain coverage, and limitations on perils, sub-limits, and indemnity periods may significantly restrict recovery.

The insurance market in Thailand has evolved since 2011, but fundamental policy structures remain largely unchanged. Insurers and policyholders who approach 2025 claims with a clear understanding of coverage scope and limitations will navigate the claims process more effectively than those who assume comprehensive coverage and discover limitations only after disputes arise.

Conclusion

Thailand’s 2025 floods have already exceeded the 2011 event in peak rainfall intensity and appear likely to generate substantial insured losses. The coverage issues that emerged from 2011 provide useful guidance for managing 2025 claims, particularly the structural limitations in contingent business interruption coverage.

The challenge for insurers lies in proactively addressing known coverage gaps including limited perils CBI extensions, prevention of access language, inadequate sub-limits, and time-limited indemnity periods, before disputes with the insured arise. Early engagement, clear communication, and realistic assessment of coverage scope will differentiate effective claims handling from reactive crisis management.

The lessons from 2011 are clear. Insurers who apply them systematically will manage 2025 flood claims more efficiently and preserve client relationships through what will inevitably be a difficult claims environment.

Key Contacts & Updates

For insights or queries relating to insurance and dispute developments across Thailand and the wider APAC region, please feel free to reach out to our authors.

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