Cost of life policies in Taiwan expected to spiral by 20%

Added 16th November 2016

The cost of life insurance policies is expected to rise by as much as 20% next year as the Financial Supervisory Commission (FSC) tightens reserve requirements.

Cost of life policies in Taiwan expected to spiral by 20%

The New Taiwan dollar, the US dollar and the Australian dollar have been lowered by between 1 and 3 basis points in the aftermath of the US elections which saw Donald Trump elected at the next president, reported the Taipei Times.

As a result, life insurers will have to allocate more funds to their reserves to meet the FSC requirements, leading to higher costs in underwriting insurance products, Insurance Bureau deputy director-general Shih Chiung-hwa said during a news conference in Taipei last week.

The FSC made the decision to leave the benchmark rates for the Chinese yuan and the euro unchanged.

With lower returns, companies are expected to pass the extra costs on to their customers to avoid incurring losses, added Shih.

“Whole-life insurance, paid-up additional whole-life insurance with compound interest and level-premium whole-life insurance products are expected to see the most pronounced price increases,” she said.

Shih explained that the price increases would vary according to the structure of the issuer, citing the Bureau’s latest data.

For example, the price of a New Taiwan dollar-denominated whole life insurance product with a six-year duration is like to spike by between 8% and 11%, while the cost of a 20-year whole life insurance product is set to increase by up to 23%, she said.

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Monira Matin

Senior Reporter

Monira joined International Adviser in March 2016 from Informa Global Markets where she worked as a eurobond reporter for over two years, covering fixed income markets. She has previously held a number of editorial positions covering politics, insurance and technology. Monira has a degree in Journalism and Economics from City University.

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