The Taiwanese life insurance industry will grow at a compound annual growth rate (CAGR) of 3.3% from TWD2.9 trillion ($106 billion) in 2021 to TWD3.5 trillion ($135 billion) in 2026, in terms of direct written premiums (DWP), supported by foreign currency-denominated insurance, and the establishment of internet-only life insurers, predicts GlobalData, a leading data and analytics company.

GlobalData’s Global Insurance Database reveals that while Taiwan’s overall life insurance new business DWP declined by 4.4% in 2021, foreign currency-denominated insurance grew by 22%, accounting for a 68.5% share of the life insurance new business. An increase in interest rates by foreign monetary authorities, including the US central bank, is expected to support the uptake of these insurance products in the coming years.

Deblina Mitra, Senior Insurance analyst at GlobalData, comments: “The outlook for the Taiwanese life insurance industry looks optimistic over the next few years due to the implementation of favorable regulatory measures by the Financial Supervisory Commission (FSC). The most prominent among them is the proposal to establish internet-only insurance companies in 2021. The FSC is inviting applications to set up such companies until 31 October 2022, and post-approval they are expected to start operating by early 2023.”

The establishment of internet-only insurers will further enhance the online availability of life insurance, which is traditionally sold through banks and agents. Due to the unfavorable business environment accompanied by the COVID-19 outbreak, the operations of banks and agency channels have suffered a setback since 2019.

Internet-only life insurers will only be allowed to sell protection insurance covering life risks due to its relatively simple policy structure and low premiums. With rising awareness, protection insurance has consistently recorded growth as compared to savings products during 2017–21.

Mitra adds: “Due to persistently low-interest rates in the domestic market, demand for traditional TWD-denominated savings policies has continued to decline. This has increased insurers’ focus on promoting foreign currency-denominated insurance as they provide higher interest rates.”

In 2021, the life insurance industry growth in Taiwan declined by 6.1% in 2021, as it continued to deal with a prolonged period of low interest rates and discontinuation of products such as disability insurance due to high claims associated with them.

Mitra concludes: “The Taiwanese life insurance growth is expected to pick up pace over the next five years supported by foreign currency-denominated insurance and protection insurance products. Maximizing customer reach through digitalization will provide further impetus to this growth. However, the growth will remain affected by the impact of the Ukraine war and its impact on global financial markets.”