Taiwan

Principal Legislation

Taiwan’s insurance industry is governed by several key legislative acts, including:

• Insurance Act (first enacted in 1929 and most recently amended in 2010) – The primary law governing insurance operations, solvency, licensing, and business conduct for insurers and intermediaries.
• Compulsory Automobile Liability Insurance Act – Introduced in 1996, this law mandates third-party motor liability insurance.
• Simple Life Insurance Act – Regulates micro-insurance and simplified life products, with the latest amendments in 2010.
• Financial Consumer Protection Act (2011) – Provides safeguards for consumers in financial transactions, including insurance services.
• Labor Pension Act (LPA) (2005) – Outlines pension-related obligations for employers and insurers under Taiwan’s labor retirement scheme.

Supervision

• The insurance industry in Taiwan is supervised by the Insurance Bureau (IB) under the Financial Supervisory Commission (FSC), which has held this responsibility since 2004.
• The Non-Life Insurance Association of the Republic of China serves as a liaison between non-life insurers, the regulator (FSC), and the government, and it also provides market statistics.
• The Life Insurance Association of the Republic of China (LIA-ROC) plays a similar role for the life insurance sector, coordinating with the FSC and the government and publishing relevant industry data.

Admitted/Non-Admitted

Unauthorised insurers are not permitted to carry on insurance business in Taiwan.

However, there is no explicit legal requirement stating that insurance must be purchased from locally authorised insurers, and this is often interpreted to mean that offshore insurers may issue policies if they are approached directly by the insured.

Insurance brokers and agents in Taiwan are prohibited from placing business with insurers not approved or registered by the regulator.

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-owned non-life insurance companies in Taiwan. However, the government maintains control over three life insurers: Bank Taiwan Life, Kuo Hua Life, and the life insurance division of Chunghwa Post.

Tariff Classes

The only statutory tariff applies to compulsory motor third party liability insurance. All other tariffs were officially abolished as of 1 April 2009.

Premium Taxes and Charges

A premium tax of 2% applies to both life and non-life insurance policies (including health under non-life). In addition, a stamp duty of 0.4% applies. Reinsurances, whether ceded locally or overseas, are subject to a 1% reinsurer’s tax.

Policy Language 

Insurance policies are required to be issued in Chinese. An English translation may be provided for reference.

Taiwan’s non-life insurance market has seen strong recovery and growth in recent years, particularly in the motor and property sectors. Despite challenges such as natural catastrophes, including a recent earthquake in Hualien, insurers are profitable due to sound underwriting practices and support mechanisms like the Taiwan Residential Earthquake Insurance Fund (TREIF).

Motor and property insurance is the largest segments of the market, with increasing demand for fire and natural hazard cover. The market outlook is positive, supported by rising awareness of disaster risks, demographic shifts, and continued urbanisation. While pricing is competitive, insurers are tightening terms and gradually raising premiums in high-risk areas to maintain healthy margins and long-term sustainability.

Taiwan has one locally incorporated reinsurer that plays an active role in most domestic reinsurance programs. The market is also supported by representative offices of several international reinsurers. Facultative reinsurance is commonly exchanged among market participants across various classes of business.

While local direct insurers do not typically underwrite each other’s treaties, some larger players have begun accepting regional inwards reinsurance, reflecting a gradual expansion in reinsurance appetite and diversification strategies.

In Taiwan’s insurance market, non-life business is predominantly distributed through agents, who continue to hold a significant share. Life insurance, on the other hand, is primarily driven by insurers’ direct sales forces. While digital platforms and bancassurance are emerging, traditional channels are dominant.

Taiwan is prone to earthquakes due to its location along the Pacific Ring of Fire, though less intensely than Japan. Flooding, often linked to typhoons, is a widespread and significant exposure across the country. Windstorm risks are considered secondary compared to earthquake and typhoon-related flood events.