Taiwan Insurance Report Q1 2016 - New Market Report

The Taiwan ese life insurance market is well developed, with penetration and density rates that among the world's highest, reflecting the established role the sector plays in citizens' late-life plan ning and retirement needs. Life insurance premiums are expected to continue to grow throughout the forecast period, supported by domestic economic growth and rising rates of private financial consumption, though we note that over the longer term a shrinking working age population and higher proportion of retirees will place pressure on the profitability of life insurance providers. Alt hough some recent financial market troubles are notable, Taiwan remains an attractive investment destination overall and is less risky relative to many of its regional neighbours. Non-life insurance sector growth is primarily being driven by health insurance through 2019 and most other subsectors will exhibit little to no growth through 2016.

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Key Updates & Forecasts :

The third quarter of 2015 returned lackluster results in financial markets and the global economy. Continued economic troubles in China will be a drag on Taiwan's economy, resulting in downgrades to our 2015 projections in many insurance lines. We anticipate that these troubles will continue to negatively impact investment returns in the life insurance sector, as well as premium growth in the non-life sector in 2016, aside from health insurance.

Overall, the proportion of health insurance to total non-life premiums will continue to rise overall and we are expecting consolidation in the industry as a whole amongst smaller providers.

Despite short-term volatility, Taiwan is a strong and stable place to invest. Life insurance premiums are forecast to decline of 2.5% in USD terms in 2015 but will average 6.6% growth between 2016-2019. After a decline of 0.8% in 2015 non-life premiums will expand by 7.4% in the forecast period.

Falling interest rates and global economic volatility remain a risk, particularly to those companies with significant foreign bond exposure but many of the large life insurance players are taking steps to address their financial exposure and increase foreign investments, most notably China Life. Taiwan's central bank is responding by loosening monetary policy and lowering the exchange rate to push exports and inflation. Likewise, the government has continued to support domestic stimulus aimed at boosting consumption.

The Taiwan Insurance Report has been researched at source and features BMI Research's independent assessment and forecasts for the insurance sector. It examines industry developments, key growth drivers and risk management projections, including the macroeconomic situation, government policy, regulatory environment and the level of development and potential for growth, broken down by line. Leading insurers are profiled, covering premiums, products and services and competitive positioning.

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