Taiwan insurers see steady growth
There continues to be steady demand in the Taiwan non-life insurance market for certain lines of business since the onset of the COVID-19 pandemic. Direct premiums written (DPW) grew by 7 percent in 2022, albeit down from 10 percent in 2021. Still, positive momentum extended into the first half of 2023, driven mainly by high demand for motor and fire coverage, as well as liability and marine products, and partially counterbalanced by shrinkage in other insurance lines.
That is according to AM Best’s Market Segment Outlook “Taiwan Non-Life Insurance” published in October. It noted that the five-year (2018 to 2022) compound annual growth rate was 8 percent. The non-life segment remains competitive and dominated by domestic companies, which accounted for 97 percent of overall DPW in 2022, with the three largest players accounting for more than 47 percent of DPW.
Non-life companies have similar underwriting portfolios, which have been stable for the past five years. Motor was again the largest line of business, accounting for 52 percent of DPW, followed by fire (15 percent), accident (9 percent), and liability (7 percent). Motor consists of voluntary motor, accounting for 84 percent, and compulsory motor, accounting for 16 percent, of the segment’s DPW.
Compulsory and voluntary motor businesses have both expanded over the last five years. However, voluntary motor insurance has expanded at a faster rate owing to consecutive premium rate hikes for voluntary third party liability coverage and continuous growth in new car sales—particularly imported, higher-value vehicles.
Profits in the sector were volatile in 2022 and 2023. Due to COVID-19 pandemic-related losses, the non-life segment suffered a huge net loss of TWD173 billion ($5.4 billion) in 2022 due to the pandemic, which outstripped the cumulative earnings of the last decade.
Some non-life insurers continued to see unfavourable claims development and reported net losses in the first quarter of 2023, but the majority remained in the black or had returned to operating profitability as of the second quarter of 2023.
The performance was attributed to good underwriting margins in traditional, non-pandemic products during a benign natural catastrophe loss year. Full-year 2023 operating performance is likely to be bolstered by the recovery in the capital markets as well as reserve releases, given that pandemic policies have all matured, and ultimate claims should be close to fully developed.
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