Many Taiwanese use life insurance as a savings tool, because they can garner higher interest rates than if they place deposits with banks.
While this trend has led to Taiwan being one of the world’s most highly penetrated insurance markets, in reality people are still acutely under-protected, because they are buying savings products, not protection insurance, according to Taiwan Business TOPICS, a publication of the American Chamber of Commerce in Taipei.
Yet, existing policies governing retirement savings and labour insurance offer consumers minimal tax incentives for saving for retirement, said RGA Global Reinsurance in a written statement.
“The financial industry is highly regulated, constraining financial institutions from providing a variety of choices in terms of retirement vehicles/products to offer the population.”
Mr Danny Lam, President and CEO of Allianz Taiwan Life Insurance, said: “Because the interest rate in Taiwan is low and has been low for a long time, it’s difficult for us to offer attractive NT dollar retirement planning products to customers. Long-term savings products in NT dollars were quite popular before, but now the rates are not attractive.”
Giving another view, Ms Christine Jih, Chairman and CEO of BNP Paribas Investment Partners Taiwan, notes that the Taiwanese tend to invest their money in trading-oriented investments. “Taiwanese are not used to long-term planning, long-term investment,” she said.
Société Générale Group Country Head Godwin Chang said: “I don’t foresee any huge changes in the coming years, so insurance companies and banks will continue to play a big role in people saving money for retirement.” A