Taiwan: Five insurers lower declared interest rates
Source: Asia Insurance Review | Oct 2019
Five Taiwanese life insurers have cut the declared interest rates for their interest-sensitive New Taiwan dollar and US dollar products in a bid to reduce operating risks.
Among them, Cathay Life Insurance announced on 1 September on its website that it would lower the declared rates for dozens of its US dollar-denominated policies from last month’s 3.55% to 3.2% or 3.15%. The insurance company is also lowering the rates of some of its NT dollar-denominated policies from 2.5% to 2.25%, reported The Taipei Times.
Fubon Life Insurance trimmed the rates for its US dollar policies from 3.5% to 3.25% and cut rates for its NT dollar policies from 2.5% to 2.3%. Fubon Life’s declared rates in January were as high as 3.7% for US dollar products and 2.96% for NT dollar products, company data showed.
The other three insurers which cut their interest rates are Transglobe Life Insurance, China Life Insurance and Nan Shan Life Insurance.
Insurers in Taiwan began to lower the declared interest rates in March, after the Insurance Bureau warned in January that setting unrealistically high declared rates could pose a risk to their businesses.
While higher declared rates mean higher bonuses for policyholders, they leave insurance companies vulnerable to foreign-exchange risks, as most of their investments target overseas assets, the regulator said. A