About 65–70 percent of insurance losses suffered in Thailand were borne by Japanese insurance companies through local subsidiaries, joint ventures or direct presence in the country (Courbage et al., 2012). Many of these had already paid out large amounts owing to the Great East Japan Earthquake and tsunami (Aon Benfield, 2012b). In spite of significant reinsurance, the three largest property insurance companies announced that their net loss owing to the flood was expected to be as high as US$5.1 billion as of mid-February 2012.

As a consequence, private insurers and reinsurers began to restrain flood coverage and charge higher premiums owing to the high risk of the country. This created challenges for Japanese companies with facilities in Thailand. As a result, the Japan External Trade Organization (JETRO) and Japanese business association requested the Thai Government to establish a public reinsurance fund to restore business confidence by providing flood insurance and reinsurance^v . The Thai Government set up the National Catastrophe Insurance Fund in March 2012. However, if insurance pricing does not reflect risk levels, this may encourage rather than discourage increased disaster risk in the country. With the new Fund, these risks are now in effect owned by the Government of Thailand.