Taiwan insurers to shift towards new solvency, sustainability

The regulator has also pushed for changes in product mix.

Taiwanese insurers are expected to move towards global standards which will see the adoption of new accounting rules, a shift to a new solvency regime and product mix changes, according to a Fitch Ratings report.

Following stricter regulations to prepare insurers for new accounting standards, analysts observed a move from savings-type products to foreign-currency ones. Insurers are now allowed to expand investments for better asset-liability management and promote more globally-aligned risk management practices.

The regulator has also begun to address the potential capital gap well in advance by requiring insurers to make up for the shortfall in insurance reserves, and has recently introduced a threshold on the net worth ratio to limit leverage.

Fitch expects the regulator to release more details on the three-stage road map it announced in July 2020 for the adoption of the new accounting standards and solvency regime.

Sustainability has also been moving up the regulatory agenda, evidenced by the encouragement to develop green insurance products. Climate-change risks are now on the supervisory radar and will continue to grow in importance in the future, the report said.