The regulatory framework for nonlife insurance products in Taiwan should be reviewed, including extending compulsory insurance, so as to enhance consumer protection while according greater flexibility for insurers to respond to changing market conditions, both in managing risks and enhancing their competitiveness, says The American Chamber of Commerce in Taipei in its recently released 2017 White Paper.
“The difficult current economic conditions and concerns regarding operating costs have resulted in underinsurance in a number of cases, including the Formosa Water Park dust explosion and the tourist bus fire. We see the need for the government to increase the insurance limits and expand the scope of compulsory insurance,” said Amcham Taipei's Insurance Committee.
The Committee applauds the recent government proposals to increase the public liability insurance aggregate limit to NT$64 million (US$2.1 million) [any one death/bodily injury NT$3 million, property damage NT$2 million and any one accident NT$30 million] following such disasters as the Formosa Fun Coast dust explosion, Kaohsiung pipeline explosion, etc. Since then, it appears that only Taoyuan City has increased the limit to NT$60 million while little progress has been made in the other cities and counties.
The panel recommends that the relevant authorities:
a. Strictly enforce the public liability insurance limit in all cities and counties to ensure that the public in general is well protected towards accidental bodily injury/death.
b. Review the existing compulsory automobile third-party liability insurance limit of NT$2 million maximum for each death and NT$200,000 maximum for each bodily injury, as such limits are grossly understated compared to other countries in the region.
c. Expand the scope of compulsory insurance to include, for example: • Pollution Liability • Workmen’s Compensation in addition to the existing labor insurance • Aviation Liability • Professional Indemnity for individual lawyers, legal firms, architects, accountants, insurance and reinsurance brokers • Pleasure craft • Shipowner’s Liability and marine oil pollution • Airport Liability • Clinical Trials.
While the government has made good progress in relaxing the wet signature requirement over the last two years, the Insurance Committee believes that further relaxation can be achieved in the commercial business area. It asks the authorities to waive the wet signature requirement on nonlife Commercial Insurance application forms to meet commercial market needs.
Setting out its reasons for the waiver request, the Committee said: “Unlike Personal Insurance, there is no risk of moral hazard in Commercial Insurance. Regarding the fronting business, given the large number of foreign-invested and multinational companies in Taiwan, most of the insurance planning and insurance coverage has been determined at the home-office level.
“The insurance brokers/reinsurance companies representing all these multinational companies would have clearly articulated the intent and scope of insurance coverage through emails or other forms of documentation. Emails or other forms of documentation are clear confirmation of insurance needs. Removing the wet signature requirement for all commercial insurance – or if that is not possible, at least for multinational companies requirement – would help expedite the policy issuance for commercial clients; reduce unnecessary administrative work, time, and cost; and bring Taiwan’s insurance practices more in line with international markets.”