The life insurance industry in Taiwan is projected to grow at a compound annual growth rate (CAGR) of 0.4% from TWD3.16 trillion ($107.0bn) in 2020 to TWD3.23 trillion ($121.2bn) in 2025, in terms of direct written premiums (DWP), according to GlobalData, a leading data, and analytics company.
According to GlobalData, the growth is expected to pick up from 2022 supported by growing demand for foreign-currency-denominated investment insurance products and the aging population.
Deblina Mitra, Senior Insurance Analyst at GlobalData, comments: “After contracting in 2019 following years of slowdown, Taiwan’s life insurance industry further contracted by 8.7% in 2020. This was due to low-interest rates and capital market fluctuations that reduced yields from life insurance investment products, lowering their demand. This trend is expected to continue in 2021 and the industry is expected to decline by 5.9%.”
The decline was prominent in whole life, term life, and endowment business lines which collectively accounted for 75% share of the life insurance DWP in 2020. It registered a decline of 11.1%. The outlook is optimistic as these business lines are forecasted to grow by 1.4% in 2022.
GlobalData’s Global Insurance Database reveals that the demand is expected to be supported by foreign currency policies that offer possibilities of better returns as compared to the Taiwanese dollar. To support the growth of these products, in June 2021, the regulator increased the limit for life insurers operating in foreign-currency-denominated insurance businesses from 35% to 40%.
Protection insurance products such as personal accident and health (PA&H) insurance sold by life insurers accounted for a 14.8% share of DWP in 2020. It is expected to grow by 0.9% in 2022, driven by preventive and disease-specific insurance products such as cancer insurance products that are particularly popular given that it is the leading cause of death in Taiwan.
Annuities that accounted for a 9.5% share in 2020 are expected to record a 71.9% growth in 2021. Demographic factors that include a super-aging society and promotion of foreign currency-denominated products that offer better returns supported the demand for these products. Annuities are forecasted to grow by 3.0% in 2022.
Mitra concludes: “Taiwan’s life insurance industry’s growth momentum is expected to remain subdued over the next five years as challenges related to adverse market condition, declining working-age population, and an existing mature market will continue to oppress the demand. The demographic shift towards the super-aging population is expected to be a focus area for insurers with more products being launched targeting this age group.”