The Taiwanese cabinet has approved an amendment in the country's Insurance Act that bars the courts from seizing the life insurance policies of people in debt.
According to the amendment if the payout for the life insurance policy or other eligible policies of the insured person is less than 1.2 times the minimum monthly living wage for three consecutive months, the insurance policy may not be seized or terminated.
Insurance Bureau (IB) deputy director-general Tsai Huo-yen said under the existing rules the government had ordered the termination of 928,000 insurance policies from January 2023 to September 2024. The Taiwanese supreme court in a ruling in 2022 had affirmed the courts’ authority to order insurance companies to end life insurance policies of people in debt.
Of the insurance policies terminated, 30% were life insurance policies, while 70% were casualty insurance or health insurance policies. Mr Tsai said the ruling of the supreme court was for life insurance policies, but other insurance policies, including health policies and policies with a low termination payout, were also subsequently included.
According to IB while the termination of insurance policies helped repay debts, it also meant that the indebted no longer had medical or life insurance covers. He said in addition the process of termination of insurance policies to repay outstanding debts also took up a lot of time and personnel.
About 46,000 policies have been terminated, significantly infringing the guarantees the affected people have built for themselves.