Taiwan life insurance to pick up the pace in 2024 following years-long decline
Taiwan life insurance to pick up the pace in 2024 following years-long decline | Insurance Business Asia
Life & Health
Taiwan life insurance to pick up the pace in 2024 following years-long decline
Before the growth, however, comes a 2% downturn in 2023
Life & Health
By
Kenneth Araullo
Following a tumultuous few since 2019, the Taiwan life insurance sector is set to make a decent comeback beginning in 2024, powered by improving global macro-economic situations, increased interest rates, as well as positive regulatory developments.
The latest insights from GlobalData, however, noted that the storm is yet to pass; the market is set to decline further by 2% in 2023. This downturn is caused by various factors such as a prolonged period of low interest rates, lack of innovative product offerings, and the terminations of propositions with high claims payouts like disability insurance.
The industry will bounce back next year, however, with a compound annual growth rate (CAGR) of 3% from $77.7 billion in 2023 to $91.6 billion in 2027 in terms of direct written premiums (DWP). GlobalData analyst Anurag Baliarsingh said that the decline in the past few years had to do with the appreciation of the US dollar, which has caused premiums to surge.
“The Taiwanese life insurance industry witnessed an unprecedented decline of 21.4% in 2022 due to uncertain market conditions, which impacted the industry’s renewals,” Baliarsingh said. “Premiums from foreign-currency-denominated life insurance policies, which accounted for 46.7% of new business in 2022, declined by 32%. This was due to the appreciation of the US dollar, which caused an increase in the prices of these policies.”
Term life, which is the largest slice in Taiwan’s life insurance pie at 45.4%, declined at a CAGR of 6.7% during 2017 to 2022 due to changing customer preferences. Inflation has also impacted consumer’s disposable income as well as their appetite for term life products.
“However, it is expected to grow over the next few years, supported by positive regulatory developments,” Baliarsingh said. “For instance, the proposal to allow neo-insurers will support term life insurance sales as neo-insurers will only be authorized to sell online term insurance. As a result, term life insurance is expected to grow at a CAGR of 3.4% over 2023-2027.”
Endowment insurance, which accounted for 21.6% of the life insurance DWP last year, is expected to grow at a CAGR of 2.3%. The sizeable portion for the endowment insurance is backed by investment-linked endowment policies being the preference in Taiwan as these propositions provide better returns than regular savings products from banks.
Meanwhile, the third largest share goes to personal accident and health at 20.9%. This line will be supported further by a super-aging society and the high life expectancy in Taiwan. Government initiatives with support from the Taiwan Digital Health Industry Development Association to provide equitable and digital healthcare are also expected to boost the sector to grow at a CAGR of 3.3% between 2023 and 2027.
“After years of decline, Taiwan’s life insurance industry is forecast to recover from 2024, supported by positive regulatory developments. However, despite this recovery, Taiwan’s life insurance industry is not expected to reach its previous levels of growth in the near future,” Baliarsingh said.
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