Taiwan’s insurance sector is under the spotlight as Fitch Ratings points out that its regulatory environment lags behind global counterparts. The nation’s insurers function within the framework of the Insurance Act and are supervised by the Financial Supervisory Commission (FSC). The FSC’s Insurance Bureau is tasked with closely monitoring the industry’s operations and growth to safeguard the interests of policyholders.
To ensure solvency, Taiwanese insurers adhere to a local risk-based capital (RBC) framework, which is subject to regular reviews by the FSC. In anticipation of the implementation of the localised Insurance Capital Standard in 2026, along with the adoption of International Financial Reporting Standards (IFRS) 17, insurers are shoring up their capitalisation. This is in response to the more stringent requirements concerning asset and interest-rate risks. The FSC has also rolled out guidelines on localisation adjustments and transitional steps for the new solvency regime. In preparation, leading life insurers have taken measures such as receiving equity capital injections or issuing bonds, both domestically and offshore through overseas special-purpose vehicles, to meet the escalating capital needs.
Taiwan’s insurance market is renowned for its sophistication, presenting a wide array of products in both life and non-life segments. Notably, the life insurance segment is undergoing a transformation, pivoting from traditional savings-oriented policies towards protection-type offerings. These policies are expected to yield higher contractual service margins under IFRS 17. These developments collectively showcase Taiwan’s endeavours to bring its insurance industry in line with global norms while simultaneously addressing concerns related to capital adequacy and regulatory evolution.
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