AM Best has assigned a market segment outlook of stable to Taiwan’s non-life insurance market, citing consistent favourable underwriting and investment performances, as well as the strong capitalisation of Taiwan’s non-life insurers, despite some negative impacts from the COVID-19 pandemic.
The new Best’s Market Segment Report, titled, “Market Segment Outlook: Taiwan Non-Life,” states that while many economies in the Asia-Pacific region continue to grapple with the challenges brought on by the COVID-19 pandemic, the Taiwan economy has remained resilient relative to its peers. Additionally, over the last few years, the non-life insurance market has been expanding at mid to high single-digit rates in tandem with the economy. In 2019, total direct premium written (DPW) rose by 7% to TWD 177 billion (USD 5.9 billion). The Taiwan insurance sector is considered to be a developed market in Asia Pacific, with one of the highest non-life insurance penetration rates, at 3.5%.
The impact of COVID-19 has not been particularly significant on the Taiwanese non-life insurance segment. In the first half of 2020, total non-life insurance DPW grew by 6.4% year on year, supported by a steady demand in key product lines including health, fire and engineering and voluntary motor. The expansion of the health insurance segment, which was driven by increases in the individual and group health businesses, has helped to partially offset the fall in travel insurance demand as international travel came to a grinding halt amid the pandemic.
Government expenditure on infrastructure and green energy initiatives, such as offshore windfarm projects, coupled with stable insurance demand from large commercial accounts, have continued to boost insurers’ premium revenue in the fire and engineering lines over the last few years. In the personal lines segment, the motor business benefited from a stable level of new automobile sales, as well as a rise in demand for third-party liability cover as public awareness of the need for stronger protection grew.
Investment income is a key contributor to the overall operating results of Taiwan’s non-life insurance segment. AM Best notes that most insurers generally adopt a prudent asset allocation strategy, and that portfolios are well-diversified and highly liquid with cash and cash equivalents, and are composed predominantly by investment-grade bonds. AM Best expects that the non-life insurance companies in Taiwan will continue to deliver positive underwriting results, with above-par margins as compared with those of other developed non-life markets in the region.
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To view current Best’s Market Segment Outlooks, please visit http://www.ambest.com/ratings/RatingOutlook.asp.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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