The first-year premium income of the life insurance market in Taiwan will rise by between 5% and 10% next year, according to a 2025 insurance market forecast by the Taiwan Insurance Institute (TII).
The growth will be fuelled by interest rate cuts in the US. In such an environment, participating life insurance plans are expected to continue to sell well while demand for variable life insurance is expected to rise and restrictions on investment-type products are lifted, reported the Central News Agency quoting the TII.
Also, it is estimated that the renewal premium growth rate in 2025 will be 5% plus or minus. Taking into account the predicted first-year premium growth rate, the TII estimates that in 2025, the total premium income will rise by 7% under relatively benign market conditions and may slide by 2% under a conservative market scenario.
In the P&C insurance market, the estimated premium growth rate is predicted to be between 5% and 10%.
The 2025 insurance market forecast was released by the TII during the annual “Economic & Insurance Development Forum” held on 10 December.
Dr Huang Hong-Chih, who assumed the post of TII chairman on 19 November 2024, said at the Forum that in the first three quarters of this year, the first-year premium income of the life insurance industry increased by more than 13%. He also said that three major factors had affected Taiwan's insurance industry.
Firstly, the US Federal Reserve's monetary policy has affected asset prices. The Federal Reserve has reduced interest rates twice so far this year — first by a half-point in September and then by a quarter-point in November. This has led to a recovery in the value of US debt assets held by the Taiwanese life insurance industry, and related financial metrics have been eased, including capital adequacy ratios and net worth ratios.
Secondly, the impact of inflation in various countries has caused an increase in insurance claims costs, especially for long-tail businesses.
Thirdly, climate change has caused a sharp increase in premium rates in the international reinsurance market, resulting in an increase in reinsurance costs in the Taiwanese P&C insurance industry. The premium rates for some insurance products will be hiked.
Survey findings
The TII also released the findings of an industry survey showing that 91% of senior life insurance executives polled expect that the total premium income of the life insurance industry will show positive growth next year. 58% of the executives believe that the growth rate will reach up to 5%. As for the profit outlook, 57% believe that there will be no big change compared with this year.
In the non-life insurance sector, the executives polled name catastrophe risks, reinsurance capacity, and digital technology as the main factors that will affect market growth.
More than 90% of the P&C insurance executives polled expect the premium income of the non-life sector to show positive growth. 75% believe that the growth rate will be between 5% and 10%.
Among 21 life insurance companies, a total of 81% responded to the survey questionnaire. All 19 non-life companies to whom the questionnaire was sent responded.