Taiwan’s stable economic growth, coupled with a strong pipeline of infrastructure projects and increased vehicle sales, will drive growth of the Taiwanese non-life insurance sector, according to Timetric, a provider of online data, analysis and advisory services on key financial sectors.
The gross written premium of the Taiwanese non-life segment increased from TWD98.9 billion (US$3.0 billion) in 2009 to TWD116.5 billion in 2013, at a CAGR of 4.2%. Timetric expects the non-life gross written premium to further increase to TWD130.9 billion by 2018.
This future growth will be driven by a combination of factors: Taiwan’s sustained economic expansion which is expected to grow from TWD15,800 billion in 2014, and is expected to top TWD24,100 billion by 2024; and on-going infrastructure developments which are set to be heavily insured, given the island’s history of fire-related disasters as well as exposure to Nat CATs.
In addition, new vehicle sales increased from 229,500 in 2009 to 258,800 in 2013. In turn, the number of motor insurance policies increased from 22.4 million in 2010 to 25.7 million in 2013, at a CAGR of 4.7%. This growth is expected to continue over the next four years, with motor insurance premiums predicted to increase at a CAGR of 5.5%.
Despite a positive outlook, the success of the insurance industry has generated its own issues. The increase in sales has boosted cash reserves and insurers are now struggling to find profitable investment opportunities within the domestic market.
Aware of this issue, the Financial Supervisory Commission (FSC), Taiwan’s insurance regulator, wrote the rules governing foreign investments for insurers in April 2014, which resulted in a wider range of overseas investments that do not count against the FSC’s imposition of a 45% ceiling.