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After witnessing a continuous decline since 2019, Taiwan’s life insurance market is set to make a turnaround from 2024, driven by an improvement in the global macro-economic situation, an increase in interest rates and positive regulatory developments, according to GlobalData, a leading data and analytics company.
According to GlobalData’s Insurance Database, Taiwan’s life insurance market is expected to decline further by 2% in 2023. This decline is due to various factors including a prolonged period of low-interest rates, a lack of innovation in product offerings, and the termination of products such as disability insurance due to the high claims associated with them. However, the industry is forecast to grow at a compound annual growth rate (CAGR) of 3.0% from TWD2.3 trillion ($77.7 billion) in 2023 to TWD2.6 trillion ($91.6 billion) in 2027, in terms of direct written premiums (DWP).
Anurag Baliarsingh, Insurance Analyst at GlobalData, comments: “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. 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 is the largest life insurance product, accounting for a 45.4% share of Taiwan’s life insurance DWP in 2022. It declined at a CAGR of 6.7% during 2017-22 due to changes in customer preferences. The rise in inflation has also negatively impacted consumer disposable income and their interest in term life products.
Baliarsingh continues: “However, it is expected to grow over the next few years, supported by positive regulatory developments. 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 accounted for a 21.6% share of the life insurance DWP in 2022. Investment-linked endowment policies are preferred insurance products in Taiwan as they provide better returns than savings products from banks. Endowment insurance is expected to grow at a CAGR of 2.3% over 2023-2027.
Baliarsingh adds: “The current high inflation is impacting disposable income, which is supporting the demand for endowment insurance products as they offer higher returns compared to other life insurance products.”
Personal Accident and Health (PA&H) is the third largest product accounting for 20.9% of the DWP in 2022. PA&H insurance growth is supported by demographic factors such as a super-aging society and high life expectancy in Taiwan. Additionally, the initiatives by the government in association with the Taiwan Digital Health Industry Development Association (TAIDHA) to provide equitable and digital healthcare will support Taiwan’s health insurance growth. PA&H insurance is expected to grow at a CAGR of 3.3% during 2023-27.
General annuity and other life insurance products collectively accounted for the remaining 11.7% share of DWP in 2022.
Anurag concludes: “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.”