The Financial Supervisory Commission (FSC) on Thursday reiterated its stance on maintaining tighter control on overseas real-estate investment by domestic insurers following a meeting with industry representatives.
“We are opposed to proposals to change the cap on overseas real-estate investment to between 5 percent and 8 percent of a company’s available funds for investment,” Insurance Bureau Director-General Jenny Lee (李滿治) told a news conference.
The bureau in January changed the overseas investment cap to 30 percent of an insurer’s net worth, which was deemed restrictive by the industry. Although the limit was previously 10 percent of an insurer’s net worth, each investment project was approved on a case-by-case basis, and the bureau could lift the 10 percent cap at its discretion.
Changing the investment cap calculation basis from net worth to available funds would allow domestic insurers to pour an additional NT$240 billion (US$7.3 billion) into overseas real estate, on top of the current NT$300 billion, commission data showed.
Lee said that the decision has not been finalized and the bureau would continue to weigh all options, adding that the issue is among the list of policy changes that are likely to be implemented before the presidential transition of power on May 20.
Other proposals on fast-track review include further deregulation of offshore insurance units, life insurance premium financing, online sales of insurance policies and a paperless insurance policy approval process for new products.
Regarding insurers’ proposal for more flexibility in the risk-based capital (RBC) requirement ratio to deal with rising volatility in the equity market, Lee said that it is not likely that new guidelines will be implemented until next year.
RBC is a method of limiting the amount of risk an insurer can take. It requires firms to hold capital proportionate to their risk profiles.
Insurers have urged the commission to allow for a more flexible RBC requirement, so that they can avoid panicked selling during severe market downturns.
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