Taiwan life insurers shift focus to protection products

The accident and health insurance market grew 16% YoY in 9M 2024.

Taiwan’s life insurers are increasingly focusing on protection-type products and strengthening their capital base in preparation for new regulatory standards, IFRS 17 and Taiwan’s Insurance Capital Standard (TW-ICS), set for implementation in 2026, according to Fitch Ratings. 

The industry is expected to promote accident and health (A&H) insurance products, which reported a 16% year-on-year increase in first-year premiums for the first nine months of 2024. 

These products are anticipated to offer higher, sustainable contractual service margins.

Fitch also projects that potential rate cuts by the US Federal Reserve could boost demand for US dollar-denominated variable-interest life insurance policies.

Insurers’ ability to balance premium growth with margin expansion is expected to become a key differentiator for credit profiles within the sector.

Profitability in Taiwan’s life insurance sector saw significant improvement in the first half of 2024 compared to the same period in 2023, driven by stronger new business margins and favourable investment returns from stock market gains. 

The recent introduction of a foreign currency volatility reserve system by Taiwan’s Financial Supervisory Commission in August 2024 is providing insurers with greater flexibility in managing hedging costs.

As insurers prepare for TW-ICS, which will impose stricter capital requirements, they are likely to continue issuing bonds, either onshore or offshore, through overseas special-purpose vehicles (SPVs). 

These measures will help insurers meet the upcoming capital standards under the new solvency regime.