Taiwan’s general insurance industry is expected to contract by 1.7% in 2020 for the first time since the global financial crisis of 2008-2009, according to GlobalData, a leading data and analytics company.

GlobalData has revised Taiwan’s insurance forecast in the aftermath of coronavirus (COVID-19) outbreak. As per the latest data, Taiwan’s general insurance market is forecasted to grow at a compound annual growth rate (CAGR) of 4.4% during 2019-2024.

Shabbir Ansari, Insurance Analyst at GlobalData, comments: “Taiwan’s export-based economy is predominantly dependent on China. After the lockdown restrictions due to COVID-19, the country’s auto production stalled and sales stagnated. This adversely impacted motor insurance business, which accounted for 53% of general insurance premium in 2019.”

Other lines of businesses also face similar impact. Property insurance, which accounts for 19% of general insurance market, is expected to decline in 2020. Housing transactions in the country’s six major cities declined by over 20% in May 2020, compared to previous year, resulting in lower property insurance premium.

The aviation insurance line is also facing stagnancy due to restriction on the domestic and international travel. Aviation insurers also face the prospect of refunding a share of premium collected due to the clause in aviation contracts, which offers premium adjustments in cases where aircrafts are grounded for long periods.

Despite these short-term challenges, business is expected to recover from 2021, led by industries such as electronics and pharmaceuticals where growth has been relatively steady.

Ansari concludes: “Taiwan’s better control over the pandemic spread means a faster economic recovery than other countries. Key industries like automobile manufacturing are likely to get back on track as lockdown restrictions are removed and export resumes. For general insurance business, it translates into a phase of stagnant growth.”