Since its establishment in 1985, Taiwan Insurance Institute (TII) has laid a solid foundation for the domestic insurance industry, which is a vital component of the financial system. Dedicated to fulfilling its mission as a think tank for the industry, TII have two focuses: Elevating the insurance profession and educating the public about insurance. To achieve this, TII is committed to creating information exchange platforms that help improve the insurance market, educating the public about risk management, insurance and other financial topics, and improving consumer rights protection. By conducting dedicated research, actuarial calculations and data analysis, TII assists the industry in formulating development strategies and the regulator in improving regulatory efficiency, thereby enabling a strong public-private partnership. In addition, TII also keeps domestic players up to date with the latest trends by studying insurance data from other nations and nurtures professionals and talents with a global perspective, so that they upgrade their professional knowledge and skills and contribute to the sustainable development of the industry.

Back in 2024, the global insurance industry struggled to tackle challenges from emerging risks as the global economy recovered post-COVID. Under the impact of geopolitics as well as interest rate and monetary policies implemented by central banks across the world, macro-economic risks continue to affect the future of the global insurance industry. Furthermore, loss of human life and property resulting from global warming and extreme weather caused by climate change also have significant impact on society and the economy. As a result, the relationship between climate risks and the sustainability of human society has become a topic of concern in the global financial market, and the insurance industry is obligated to play its part. Committed to the Principles of Sustainable Insurance (PSI), TII works with the government and the insurance industry to promote net-zero transformation, directing funds to support sustainability construction projects and green insurance innovations. Through the completion of the second “Sustainable Finance Assessment” in 2024 and active participation in sustainability projects such as the “Net Zero Working Group”, TII seeks to deepen public-private partnerships and enhance ESG awareness and capacity building in the insurance sector. Ultimately, this will empower the sector to have more influence on the financial sector and enhance its global visibility. Hence, the industry will develop a more sustainable financial ecosystem and move toward the global goals of sustainability and net zero emissions.

Last year, Taiwan’s insurance industry still felt the impact of the COVID-19 pandemic. Against the backdrop of the U.S. Federal Reserve’s rate hikes to tame global inflation, life insurers see higher hedging costs as they adopt active foreign exchange hedging strategies to avoid excessive fluctuations in asset values. As directed by the Insurance Bureau, TII developed a new forex valuation reserve regime to reduce forex hedging costs and ease business pressure. Meanwhile, inflation and huge amounts of claims resulting from natural disasters drive up reinsurance costs, having a significant impact on the operations of non-life insurers. Fortunately, the local insurance industry demonstrates long-term resilience and remains robust. In 2024, both the life and non-life insurance industries posted significant growths in earnings.

To prepare local insurers for the adoption of IFRS17 and ICS2.0 in 2026, TII provides active support for the regulator in the implementation of these two regimes. Through dedicated project task forces, TII works on a number of projects to help local insurers improve themselves so that they can adopt the new regimes gradually and successfully.

As ground work for the smooth integration of IFRS17, the IFRS17 platform proposes draft amendments to relevant laws and regulations to the regulator and makes further adjustments based on revisions of sub-laws announced by the regulator since 2023. TII is also tasked with monitoring the progress of information system building among insurers and checking their progress against the set agenda. As of 2024, all insurers had completed parallel testing. The TII accounting team has been collecting research and sharing updates on the latest global developments of key issues relating to IFRS17, while other teams continue to organize IFRS17 seminars and training programs. To ensure consistent tax streams following the adoption of IFRS17, TII launched the IFRS17 Tax project to examine laws and regulations governing stamp duty, business tax, enterprise income tax and analyze possible impact. We worked with non-life and life insurers to conduct trial tax calculations to identify influencing factors and assess the extent of their effects before compiling recommendations to the tax authorities.

On the ICS2.0 front, TII in the past year has been tracking the latest information published by the IAIS on ICS2.0. In addition, TII completed a three-year parallel test between 2022 and 2024, where we conducted trial RBC calculations according to ICS2.0 based on information provided by insurers. We provided the regulator with the results as well as support in devising transitional and localization measures for incorporating ICS2.0.

Given the global nature of the insurance industry, TII is committed to expanding exchanges and cooperation with international institutions or organizations. By the end of 2024, TII had signed Memorandums of Understanding (MOU) with 11 international partner organizations. By actively organizing and participating in international conferences and forums, TII joins discussions on the latest issues in the global insurance market and strengthens Taiwan’s connections and interactions with international professional institutions and regulatory agencies. For example, the East Asia Pacific Insurance Forum held in August 2024 was attended by representatives from MOU partners such as the Chair of the Midwest Zone of NAIC, where speakers discussed topics such as health care, elderly protection and natural disaster risks. Such events provide opportunities for local insurers to keep up with the latest trends in the global market and engage with the international community.

As we empower the future development of the insurance industry and prepare it for future challenges, TII is committed to supporting life insurers in the transition toward IFRS17 and ICS2.0, the adoption of which shall effectively improve insurers’ capital structure and introduce significant changes, such as product portfolio transformation, business strategy adjustment, and better management of assets and liabilities. To support property insurers, TII conduct various studies to help them tackle risks associated with increasingly frequent natural disasters, terrorist attacks, pandemics and other catastrophes. Driven by advancements of AI technologies, Insurtech is expected to accelerate the optimization of services such as automatic underwriting and insurance pricing, which will enable the property and casualty insurance industry to move toward sustainable development and create win-win opportunities. As part of our effort to support the Financial Supervisory Commission in transforming Taiwan into the Asia Asset Management Center, TII is committed to boosting the innovative development of the insurance industry, exploring opportunities for FinTech, and enabling financial transformation.

Jerry Huang

Chairman

(2025/04/09)