Taiwan

 

Supervision and Control

Principal Legislation

  • The Insurance Act1929, amended in 2001, 2007 and 2010
  • The law on compulsory third party liability automobile insurance was passed in December 1996
  • The Simple Life Insurance Act, amended in 2010
  • The Financial Consumer Protection Act, 2011
  • Labor Pension Act (LPA), 2005

Supervision
The insurance industry is under the supervision of the Insurance Bureau (IB) of the Financial Supervisory Commission (FSC) which assumed responsibility for the insurance industry in 2004.

The Non-Life Insurance Association of the Republic of China produces further statistics and acts as the market liaison body with the regulator (FSC) and government.

The Life Insurance Association of the Republic of China (LIA-ROC) produces further statistics and acts as the market liaison body with the regulator (FSC) and government.

Admitted / Non-admitted
Unauthorised insurers cannot carry on insurance activity in Taiwan. At the same time, there is nothing in the law which indicates that insurance must be purchased from locally authorised insurers with some exceptions. This is generally interpreted to mean that insurers can issue policies from abroad with exceptions if approached by a buyer. Insurance brokers and agents are prohibited from placing business with insurers that have not been approved and registered.

Compulsory Classes

  • Motor third party liability.
  • Third party liability for places of entertainment and retail malls.
  • Professional indemnity insurance for insurance brokers and accountants.
  • Workers' compensation, by a state scheme, which has the power to subrogate against negligent employers.
  • Accidental death and medical expenses cover for trips from mainland China to Taiwan.
  • Third party liability insurance for occupiers of certain properties.
  • Third party liability for kindergartens and schools.
  • Professional indemnity insurance for hospitals and clinics conducting clinical trials.
  • Freight forwarders', carriers' and bailees' liability, for licensing purposes.
  • Public liability for manufacturers of hazardous goods.

State Involvement
There are no state insurance companies. The state does, however, control three life insurance companies, being BankTaiwan Life, Kuo Hua Life and the life department of Chunghwa Post.

Tariff Classes
The only statutory tariff remaining is for compulsory motor third party liability. All other tariffs were finally abrogated with effect from 1 April 2009.

Premium Taxes and Charges
All life and non-life (including health in non-life account) are subject to a premium tax of 2% and stamp duty of 0.4%. A 1% reinsurer's tax is applied to reinsurances ceded both locally and overseas.

Policy Language
Policies are required to be in Chinese, but may have an English language translation.

Non-Life (P&C) Insurance Market

The market is currently under pressure from the government to increase property rates, as they have seen rates reduce by up to 90% in the last 10 years, along with an increase in loss ratios following serious fires and damaging typhoons in recent years.

Reinsurance Market

There is one locally incorporated reinsurer, which participates in most local reinsurance programmes, as well as representative offices of a variety of international reinsurers. Local facultative reinsurance is reciprocally exchanged between all players, in all classes of business.

The direct companies do not write each others' treaties, but a small number of the larger players have started to accept a regional account of inwards reinsurance.

Distribution Channels

The non-life distribution system in Taiwan is dominated by agents who control over half of total non-life business. As for the life business is controlled by the direct sales forces of insurance companies.

Natural Hazards

Taiwan shares the earthquake characteristics of Japan, though in a less extreme form. Windstorm is not regarded as a major exposure by itself. Flood is synonymous with typhoon, and the exposure is widespread across the country.