Taiwan: Insurers urge govt to lower RBC requirements
Source: Asia Insurance Review | Jun 2016
Insurers in Taiwan have been lobbying the government to lower risk-based capital requirements to give them greater flexibility in coping with volatility in the equities market.
Insurers said that they have to take losses by selling weakening positions during a market downturn to satisfy RBC requirements, reported the Taipei Times. They have proposed the adoption of an alternative countercyclical formula, in which the required ratio would be flexibly adjusted, in line with stock market fluctuations.
Mr Ding Kung-wha, speaking as the Chairman-designate of the Financial Supervisory Commission before he officially assumed the office last month, said that in the past he had proposed a re-evaluation of RBC requirements for life insurers and he intended to raise the issue again.
Future policies would be aimed at bolstering the nation’s investment environment and stemming capital outflows, he said. The goal is to increase investments in local stocks. The average daily stock trading turnover has dwindled below the commission’s ideal range of between NT$120 billion (US$3.7 billion) and NT$130 billion, as funds continue to flow overseas.