A Message from the Chairman
After three years of the Covid-19 Global Pandemic, economic activities in various countries have gradually resumed. Driven by the twin engines of goods export and international investment, economic growth in Taiwan exceeded expectations in 2021, while the insurance industry also saw significantly higher profits. However, with the ongoing Russia-Ukraine war, energy and food became leverage in the conflict, which in turn pushed up commodity prices and triggered global inflation. Factors such as the tradeoff between controlling prices and ensuring economic growth have complicated the monetary policies of central banks across the world, and the room for fiscal policies to mitigate the impact of the war on economies is limited.
In response to extreme weather caused by climate change and global warming and to prevent material losses in human life and assets, the global economies and financial markets have been paying increasing attention to the relationship between climate-related risks and sustainability of the human society. Taiwan’s government is dedicated to promoting its energy transition plan, and the 2050 Net-Zero Emissions target has been legislated. In 2021, the Financial Supervisory Commission (hereafter, the FSC) released the “Sustainable Development Roadmap for Listed Companies” to set a timeline for the disclosure of greenhouse gas inventory and the fulfillment of sustainability responsibilities by the board of directors for these companies. In September 2022, the FSC announced the “Green Finance Action Plan 3.0” and began to promote a “Sustainable Finance Rating System”, to be launched in 2023. The hope is to overcome challenges resulting from the global transition to sustainable finance by leveraging the power of the financial industry to boost industrial upgrade and green energy development.
Due to the poor performance of the global financial market and significant COVID-19 insurance claims, Taiwan’s insurance industry suffered in 2022, with a total premium revenue of NT$2.5556 trillion, down by 19.6% from 2021, but a total asset worth of NT$34.0767 trillion by the end of 2022, up by approximately 0.8%. The fact that insurers increased capital to improve financial standing based on their operational conditions is beneficial for the robust development of the industry. In line with the regulator’s supervisory policies, TII has been actively promoting the development of the industry and introducing initiatives from international insurance organizations. Listed below are TII’s key achievements in 2022:
Life insurance actuarial statistics
TII is working in line with regulations to help the insurance industry implement IFRS 17 and the new generation solvency regime (based on ICS 2.0), while continuing to facilitate quantitative impact analysis of the industry to provide regulators with insight and useful information. This will help ensure that the assets and liabilities of the insurance industry reflect the fair value of insurers while allowing the companies to maintain adequate solvency. In 2022, TII also completed many important projects, including but not limited to: (1) researching and determining the interest rates on liability reserves required for new business; (2) organizing and analyzing the financial and business data of life insurers as required by regulations; (3) researching and proposing levels for premiums and overheads for the student group insurance program, (4) setting up a task force for studying experience morbidities related to the health insurance business; (5) publishing an annual study of the experience morbidities and loss ratios for primary lines of life insurance business; and (6) maintaining and monitoring the life insurance product database and the supervision system.
Non-Life insurance actuarial statistics
In addition to working with the regulator to prepare for the adoption of IFRS 17 and ICS 2.0, TII also maintains a statistical database for non-life insurance and a platform for actuarial analysis. Other on-going work in this area includes: (1) implementing accompanying measures as part of the third phase of the government’s policy to deregulate non-life insurance premiums, including the calculation of loss costs and reference base rates for fire insurance and voluntary automobile insurance; (2) consolidating and analyzing actuarial and financial data, business operations, and material information for the non-life industry; (3) assisting the competent authority with product filing reviews; (4) reviewing Appointed Actuary's Reports on non-life insurers and related peer review reports; and (5) setting rates for Compulsory Automobile Insurance and developing ongoing and forward-looking actuarial research and analysis on behalf of the regulator.
Research and development
TII is committed to assisting the competent authorities and insurance-related institutions by focusing on medium- and long-term policy research for the insurance market. In line with the “Green Finance Action Plan 3.0” and the “FinTech Development Roadmap” published by the FSC, TII has completed the planning of the “Sustainable Finance Rating System” in collaboration with Taiwan Academy of Banking and Finance (TABF) and the Securities & Futures Institute (SFI) and been promoting the launch of the first “Sustainable Finance Rating” in 2023. Furthermore, TII also (a) submitted a report on promoting the development of cybersecurity insurance to the Insurance Bureau; (c) completed a White Paper on the Financial Industry (the insurance sector); and (d) joined the Take force for Achieving Net-Zero Emissions in the Financial Industry, responsible for funds and statistics in the insurance industry. In preparation for Taiwan’s adoption of IFRS 17 in 2026, TII also studied related supervisory regulations and presented draft amendments. To support efforts to transform the K-12 Student Group Insurance from commercial to government-sponsored insurance, TII conducted relevant research and provided consulting services for the project, as commissioned by the Ministry of Education. To educate the public about insurance, TII publishes the periodical Taiwan Insurance Review and insurance-related books, while also operating an insurance library featuring collections of books and periodicals from home and abroad for the use of insurance practitioners and the general public.
In accordance with the authority’s finance digitization policy, TII launched the authentication and validation operations and digital archiving for the issuance of electronic insurance policies for 2 non-life insurers in 2022. As of the end of 2022, TII provided 17 non-life insurers with these services such as digital signing, seal verification, and preservation of transaction records on electronic insurance policies. In addition to enabling paperless financial product transactions and achieving the sustainability goals of energy conservation, carbon reduction and environmental protection, the storage and maintenance of full records of e-insurance policies also accomplishes the following: (a) facilitating dispute resolution by making it possible to verify policy authenticity, (b) offer better consumer protection, and (c) boosting the improvement and development of the insurance industry.
As TII is required to have management mechanisms, security and maintenance measures, and compliance practices in place for the collection, processing, and use of private data, we submitted improvement plans based on the authority’s review feedback to provide better protection of private data from the insured and strengthen information system security controls.
TII signed Memorandums of Understanding (MOU) with two international partners in 2022- the Thai General Insurance Association (TGIA) and the National Association of Insurance Commissioners (NAIC), while maintaining MOU partnerships with 11 overseas insurance-related organizations. Despite Covid-19 travel restrictions, TII hosted a number of international seminars successfully, as a way of continuing to serve as an information exchange platform that it has been for years. These events brought together speakers from Canada, the US, Germany, Japan, South Korea, Singapore and Cambodia to share their insights and expertise with representatives from the Taiwanese industry, academia, and government.
To stay on top of the latest trends, better understand international insurance regulations, and raise TII’s and Taiwan’s international profiles, TII also sent delegations to important events held by the IAIS, IIS, IGIE and AIDA, both in person and online.
Training and advocacy
Our training has undertaken digital transformation. In addition to continuing the online legal compliance training program, TII has completed the development of a standard version for elderly policyholder protection and the recording of many other digital courses. More diversified online courses would be made to offer insurance practitioners a one-stop service.
In line with the competent authorities’ key policies, we held in-person, online and hybrid courses and seminars on various forward-looking topics such as IFRS 17, ICS, corporate governance, green finance/ESG, the protection of elderly or disadvantaged consumers, FinTech/InsurTech, cybersecurity, AML/CFT, and etc. We also strengthened advocacy for disadvantaged groups and people living in remote areas to help them learn about insurance and raise their fraud awareness.
For FinTech capacity building, TII has implemented the FinTech certificate program on new tech applications to help trainees master cutting-edge knowledge on cloud computing, blockchain and the Internet of Things. Moreover, for the adoption of IFRS 17, we established an industry-academy cooperation platform for better communication and resource matching between universities and insurers, which is conducive for cultivating talents needed by the industry.In response to global sustainability trends and the national goal of net-zero transformation, TII held the 2022 International Sustainability Training Program for Talents of the Insurance Industry and the Sustainability Forum to enhance insurers’ capabilities of taking actions and to cultivate key talents for sustainable development. TII will continue to offer relevant courses and engage in the implementation of the Sustainable Finance Certificate program.
Under the leadership of the Board, TII staff members have overcome many challenges and been committed to fulfilling its missions, while striving towards the dual goals of making TII a professional insurance think tank and a regional education center. Despite uncertainties in the external environment and challenges facing both the insurance industry and TII, I am confident that TII colleagues will continue to hold themselves to the highest professional standards and do their best to accomplish the tasks assigned by the regulator and the Board.