Taiwan’s insurance industry currently faces major challenges, including long-term low interest rates, an aging population, the FinTech wave and requirements to comply with international standards such as IFRS 17, the chairman of the Financial Services Commission (FSC), Mr Wellington Koo, has said.
Speaking at an economic and insurance forum last month, Mr Koo said that in the current low interest-rate environment, consumers prefer savings products, and sales channels try to lure customers by promoting plans with high declared interest rates.
On the demographics side, according to the estimates by the National Development Council, the proportion of the elderly population in Taiwan will exceed 20% by 2026, making the island an ultra-aged society. Mr Koo said that the FSC is committed to promoting protection insurance to address this.
With effect from 1 July this year, life insurance companies are required to ensure that they provide enough death benefits for policyholders, the FSC says. Last month, it announced a minimum death benefits to policy account value ratio.
Insurance Bureau director Mr Tsai Huo-yen told The Taipei Times that the new rules state that new policies should offer death benefits of at least 1.9 times the account value for policyholders aged 16 to 30, the age bracket that has the lowest risk of accidental death. The minimum ratios are lower for older age brackets.
In the long run, the new rules would ease the intense competition among life insurers, which had to take the high risk of overseas investments to offer high returns for policyholders, he said.
Explaining the new rules, he said, “While life insurance policies originally aimed to protect policyholders, they have become more of a wealth management tool, with many insurers promoting high survival benefits instead of death benefits.”
In InsurTech, the FSC has been easing regulations covering online insurance business. The regulator has gradually relaxed the types and quanta of insurance plans , and has proposed the use of biometric technology in identity verification. It hopes to build up a digital insurance market.
Mr Koo added that the FSC is encouraging the insurance industry in Taiwan to comply with IFRS 17.