COUNTRY REPORT: TAIWAN
Increase in profits still too slow for Taiwan’s insurance industry For a developed economy, insurance penetration remains low at 1%.
Growth is expected to pick up supported by demand for foreign-currencydenominated investment products and the ageing population
O
n the surface, Taiwan’s insurance industry may appear to be winning in terms of its financial report. But GlobalData is reporting otherwise, describing the industry’s growth to be moving at a snail’s pace. The insurance industry recodred a 2021 pre-tax profit of $14.15b, according to the Financial Supervisory Commission. Out of the total, the life insurance industry’s profits reached $13.37b for the year, an 88.5% increase compared to 2020. Meanwhile, non-life insurers logged $780m in profit for 2021, a 32.9% increase from the previous year. With the demand for foreigncurrency-denominated investment products and the ageing population, the growth in life insurance is even expected to pick up in 2022. 40 INSURANCE ASIA
The demographic shift towards the superageing population is expected to be a focus area for insurers
GlobalData, however, estimates that Taiwan’s life segment will only grow at a compound annual growth rate (CAGR) of 0.4%, from $107b in 2020 to $121.2b in 2025 in terms of direct written premiums (DWP). According to GlobalData’s Senior Insurance Analyst Deblina Mitra, after contracting in 2019 following years of slowdown, the industry had further contracted in 2020. Mitra said this was mainly due to persistently low-interest rates and capital market fluctuations that reduced yields from insurance investment products, lowering their demand. The downward trend continued in 2021 with a decline of 5.9%. The report identified that the decline was most prominent in whole life, term life, and endowment business lines which collectively
accounted for 75% of the life insurance DWP in 2020, registering a decline of 11.1%. Amidst the snail-paced growth of the industry, the government has not been idle. In June last year, the regulator increased the limit for life insurers who are operating in foreigncurrency-denominated insurance businesses, which offer better returns compared to the Taiwanese dollar, from 35% to 40%. “Taiwan’s life insurance industry’s growth momentum is expected to remain subdued over the next five years as challenges related to adverse market conditions, declining working-age population, and an existing mature market will continue to oppress the demand. The demographic shift towards the superageing population is expected to be
