Despite improving profitability, the nation's insurance industry continues to face challenges this year, Ian Thompson, managing director of Standard & Poor's Asia-Pacific financial service ratings, said in Taipei yesterday.
"On the positive side, Taiwan's economic recovery has eased some pressures, although the industry's underwriting and investment performance, while up on last year, remains weak," Thompson told a press conference, citing the international rating agency's report on the local insurance sector's outlook this year.
But negative spreads, resulting from unfavorable investment conditions, will continue to burden the local life insurance sector and will likely remain a feature of the domestic industry over the medium term, he said.
The key challenges for non-life insurers, however, remain the availability and cost of global reinsurance protection, the adequacy of premium rates, competition and the market's capacity, Thompson said.
Although Taiwan's insurance market is viewed as relatively high-risk compared with Hong Kong's and low-risk compared with China's, China remains a great place for Taiwanese insurers to grab market share.
Based on the rating agency's outlook for this year, its local arm -- Taiwan Ratings Corp (
Susan Chu (
She said that, within the next three to five years, ill-performing life insurers may face a survival problem and become targets for mergers and acquisitions by larger insurers.
Commenting on the stable non-life insurance sector, Connie Wong (
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