FSC revises digital insurance rules to boost innovation in Taiwan

It will also open the digital insurance sector to non-financial backers.

Taiwan's Financial Supervisory Commission (FSC) has announced a comprehensive revision of the regulatory framework for digital insurers, aiming to attract investment, foster innovation, and accelerate the digital transformation of the insurance sector.

Key amongst the changes is the rebranding of "internet-only insurers" to "digital insurers" to align with global terminology. 

The FSC noted that many innovative insurance models internationally do not operate entirely online, and this change acknowledges that flexibility.

To encourage innovation and ensure operational sustainability, digital insurers will no longer be restricted to offering only innovative or protection-focused products. 

Instead, they must demonstrate a significant use of fintech or digital technology in their services. 

These firms may also set up physical service locations and use solicitors, agents, or brokers to distribute products, particularly when in-person services are necessary, such as risk assessment or claims inspections.

A six-month innovation protection period will be granted for newly launched innovative insurance products or services. 

This may be extended at the FSC’s discretion to safeguard intellectual property and encourage further innovation.To 

lower the entry barrier, the FSC will reduce the minimum paid-in capital requirements to $16.67m (NT$500m) for digital non-life insurers and $33m (NT$1b) for digital life insurers. 

However, companies may be required to increase their capital if their business plan demands it to ensure future solvency and growth.

The FSC will also ease ownership restrictions, allowing non-financial entities to establish digital insurers. 

Rather than imposing rigid financial thresholds, the commission will assess promoters based on their professional qualifications and operational capabilities.

Foreign digital insurers will be allowed to set up branches in Taiwan if they meet specific criteria, including a minimum paid-in capital of $67m (NT$2b) or an adequate credit rating.

Eligible firms must also have maintained solid financial performance over the past five years and have no major regulatory violations.

The FSC will not impose a deadline for submitting applications to establish digital insurers, giving prospective investors the time needed to build teams and develop viable business plans.

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