Page 53 - Digital Edition SIRC Supplement

MARKET REPORT - TAIWAN
FSC’s grand plan – One year on
Turning to the robust six-goal proposal – the “Programme to
make Taiwan’s insurers more competitive” – rolled out by the
Financial Supervisory Commission (FSC) last July, Mr Juang
noted that the regulator has been “actively working on issuing
relevant regulations and amending rules” to promote the plan
and that the industry “has similarly taken action to work with
the government effectively”.
“In the short term, we expect to see the growth in online
insurance purchases, a development of the Offshore Insurance
Units (OIUs) and the increased insurance penetration of
microinsurance.”
He added that the deregulation in capitalisation, overseas
M&A and investment activities, has increased flexibility in
insurers’ operation strategies – and was a move welcomed by
the industry.
Since the relaxation of overseas investment rules, the
proportion of foreign investment of the non-life insurance
sector’s investment portfolio rose from 12.87% in 2011 to
19.05% in 2014. And from 2013 to 2014 alone, the proportion
of capital allocated in foreign investments jumped 26.5% to
TWD41.3 billion.
Non-life players yet to fully align with FSC plan
Mr Tai too acknowledged the FSC’s efforts. However, compared
to the life sector, the non-life insurance market’s premium
volumes, assets and funds are still relatively smaller. As such, providing relevant products to meet their customers’ needs
local non-life players have yet to be able to fully “align with
the FSC’s policy” of expanding in Asia, or as he colloquially
puts it, “play in the Asian Cup” ( ).
The exception are a few subsidiaries of mega financial
holding companies, such as Cathay and Fubon, which have
managed to setup overseas branches or liaison offices in Asia
and China’s FTZs, and recently, OIUs which allow them to
provide commercial marine and fire policies to mainland
Chinese customers.
M&A incentives
Notwithstanding, the market is still encouraged by the
Executive Yuan’s passage of amendments to the Financial
Institutes Merger Act earlier in May, which include incentives
for M&A between financial institutions “in order to boost
financial innovation and eliminate inappropriate price
Back to Contents SIRC Supplement • November 2015 • www.asiainsurancereview.com 51
competition”.
“This time round, the
amendments that are being
introduced, such as tax reductions,
are more attractive and do provide
essential benefits to the non-life
insurance industry,” Mr Tai said.
“But as the Act revisions were
only just enforced, it is still too
early to tell how the market will
react to them.”
Non-life sector rallies
As Taiwan’s non-life market
industriously seeks to narrow the
gap with its life counterpart, Mr
Juang said he is “optimistic about
the sound development of the
market” and is encouraged by “the
regulator’s supportive attitude”.
“We have seen incidents
concerning public safety from
time to time over the past few
years. In order to protect the public
and maintain social stability, government officials are expected
to improve on the requirements for insurance coverage and risk
management plans for business premises and the food industry.
And the market has been actively involved developing and
and public expectations.”
He added that Central Re may also look to “apply for
approval to establish an OIU to enjoy more favourable taxation
terms and to expand business opportunities with clients”.
Wish-list for FSC
For NLIAROC, Mr Tai said the association will continue to
push for the FSC to allow non-life insurers to sell “middle-term”
products of 3-5 years, as well as “A&H insurance products”.
They are also proposing for the allowance of an “electronic
policy” version to be applicable for compulsory auto insurance,
so as to meet “public demand for the compulsory insurance
certificates to be ‘quickly received’ and ‘easily portable’ for a
‘lower probability of loss’”.
In responding to technology and big data trends, he added
that the competent authorities could commission the Taiwan
Insurance Institute (TII) to enhance the management and allow
usage of its data, so as to allow the non-life industry to leverage
on accurate, complete and real-time statistics.
“For example, if TII could publish the reference fire
insurance rate, this could help individual insurers adjust their
own rates and reserves accordingly, and help reduce business
risks,” he said.