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Taiwan Insurance Report Q1 2011
Business Monitor International, Dec 2010, Pages: 80
Business Monitor International's Taiwan Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Taiwan's insurance industry.
Writing in December 2010, we have been able to include final data for 2009 and to amend projections for the current year in order to take into account of results for H110 that have been released by major crossborder insurers in the Asia Pacific region. On the basis of figures released by the Taiwan Insurance Institute (TII) in relation to the first seven months of 2010, we estimate total insurance premiums in the year as a whole at TWD2,561,649mn. This includes non-life premiums of TWD339,222mn and life premiums of TWD2,222,436mn. In 2015, the corresponding figures are forecast to be TWD2,640,497mn, TWD471,908mn and TWD2,168,589mn. In terms of the drivers that underpin our forecasts, we predict non-life penetration to rise from 2.53% of GDP in 2010 to 2.58% in 2015. Life density is forecast to increase from US$3,043 per capita to US$3,050 over the same period. BMI’s proprietary Insurance Business Environment Rating for Taiwan is 67.2.
The relative importance of the different lines within each of the two major sectors has remained broadly unchanged for some time. Health insurance, which we have included in the non-life segment in order to ensure that our figures for Taiwan are comparable with those from other countries, accounts for about a third of the non-life insurance segment. The second largest line is auto insurance, which represents about a sixth of the total. The life segment is dominated by individual life products, which account for over three-quarters of total premiums.
Taiwan’s insurance sector is open to competition from major foreign multinationals. However, both major segments and the health insurance sub-sector continue to be dominated by large domestic companies. In non-life insurance, the leaders are Fubon, Cathay Century, Shin Kong and Mingtai – which account for about half of all premiums. In health insurance, Cathay Life, Nan Shan Life (formerly AIG’s subsidiary in Taiwan, but now owned by local interests), Shin Kong Life and Fubon Life collectively account for about 60% of business. In the much more important life segment, Cathay Life and Fubon Life alone account for nearly 40% of all premiums. Nan Shan Life, Shin Kong Life and the financial services business of Chunghwa Post each make up 8-9% of the total. However, the massive absolute size of the life insurance segment in Taiwan means that the local operations of Allianz and MassMutual – the two largest foreign life insurance companies – are substantial by any standards.
In its report on developments in the life segment in H110, the TII noted that premiums had grown by 24% compared to H109. First-year premiums had been particularly strong. It said: ‘Short-term endowment and interest-sensitive annuities remained the two strongest products.’ Our projections reflect the caution of the institute in relation to the short term. The TII expects that the rules governing the recognition of first-year premiums will be tightened. Further, the regulator’s extension of the surrender charge for interestsensitive annuities may make them less attractive. All this is happening at a time when insurers’ investment income has suffered badly as a result of market and exchange rate movements in H110.'
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