In July 2014, the FSC put out a plan – the “Programme to make Taiwan’s insurers more competitive” – detailing measures to enhance the insurance industry’s comparative advantage. It comprised six initiatives which include increasing operational efficiency and expanding businesses; responding to the needs of the ageing society; developing online insurance; improving return on capital and strengthening insurers’ financial structures; strengthening presence in Asian markets and innovating insurance products.
Reflecting on the industry’s performance in the past year, Ms Lee said the programme has “proven to be fruitful”, as she listed several highlights:
1) Strengthening protection for the disadvantaged
With a view to promoting microinsurance and safeguarding the interests of the economically disadvantaged, the FSC had made amendments on “Directions for Insurance Companies to Engage in Microinsurance Business” to relax qualification requirements of the insureds, expand the product types of microinsurance, and increase the upper limit of the sum insured, among others.
“As of 28 June, the accumulated number of individuals covered by microinsurance has reached 170,180 and the total insured amount has exceeded TWD58.1 billion (US$1.87 billion). We expect that more economically disadvantaged individuals can be taken care of and the social safety net can be strengthened.”
2) Promoting policy activation measures
“Responding to the ageing population and elderly needs, FSC is also promoting policy activation measures to allow ‘Insurance Policy Conversion in Different Functions’,” said Ms Lee.
Maintaining the same premiums, policyholders can choose to convert their original mortality insurance to health insurance (including long-term care) or annuity insurance. As at the end of June, there were 1,396 converted contracts and the sum of the converted amounts reached TWD382 million.
3) Developing the insurance business online
To further promote e-commerce in the industry, the FSC relaxed restrictions on the types of products offered, raised the maximum sum insured and allowed insurers to provide other online insurance services such as editing basic policy information.
Differentiated supervision rules were also implemented that required insurers to beef up their respective information security measures. And as of 26 June this year, the number of policies – offered by 17 companies engaging in the online insurance space – had exceeded 80,000 and amounted to about TWD86 million in premium.
Noting the “public’s positive response” to the initiative, Ms Lee said the regulator would continue to review relevant regulations to allow for more convenient insurance services for the public.
4) Developing offshore insurance business
Since allowing the setup of Offshore Insurance Units (OIUs) to enable market players to conduct offshore life, non-life and reinsurance businesses denominated in foreign currency, the FSC has received strong response from the market and has approved more than 10 insurance companies’ applications thus far.
“We expect that this will help insurers expand their business, encourage them to constantly innovate on new products, and grasp new business opportunities, and thus promote Taiwan to be a wealth management centre in Asia.”
5) Allowing insurers to engage in RMB-denominated policies and other innovative products
To promote product diversification and operation with the establishment of cross-strait currency settlement mechanism, the FSC allowed life insurers to engage in RMB-denominated non-investment-linked life policies and RMB-denominated health policies in 2013 and 2015, respectively.
Fourteen life insurers were granted permission to issue RMB-denominated non-investment-linked life policies to provide more alternatives for insurance products. Thus, as at end-June 2015, first-year premiums of the RMB-denominated insurance policies reached CNY1.23 billion.
Notwithstanding the results achieved by the regulator so far, Ms Lee said: “Based on the market conditions and the demand of business, we will constantly review relevant regulations in order to continue to strengthen the competitiveness of our insurers.”
Ongoing initiatives aimed at forging domestic infrastructure
Meanwhile, the regulator is also working on another wave of initiatives – the “Financial Infrastructure Programme” – with which it aims to enhance the robustness of the domestic financial infrastructure and establish a sound financial market.
The plan, Ms Lee said, comprises 12 aims, “including capital enhancement, asset expansion, tender offer activation, product innovation, price-bargaining prohibition, digital channel development and risk management, among others”. In addition, she shared that the FSC had launched a panel on financial innovation to “comprehensively review relevant regulations”, including streamlining the product review process for efficiency and leveraging on financial technology.
Eyes on the prize of a sound market
Turning to her current priorities, Ms Lee who took over the helm from Ms Joanne Tzeng in April, said that maintaining market discipline, ensuring the soundness of insurers, protecting consumer interests and encouraging product innovation to raise industry competitiveness are goals “we should constantly work on”.
Nonetheless, she hopes that the industry players will step up to the mantle and play their part in seizing opportunities to increase their competitiveness, so that Taiwan’s insurance market can be developed more soundly.
“Insurers’ funds come from the public. Therefore, only the stability and sustainability of the insurance industry will ensure the achievement of the goal of consumer protection. The FSC will continue to uphold the principles of financial stability. And on the premise of protecting consumers’ interests, we will continue to promote financial liberalisation and a stable environment for financial institutions’ operations,” she said.