The first-year premiums (FYPs) generated from traditional life insurance policies rose 15.4 percent annually to NT$506 billion (US$16.14 billion) in the first seven months of this year, while those of investment-linked products fell 14 percent year-on-year to NT$152 billion, a Life Insurance Association report showed.
Sales of traditional life insurance policies advanced this year, despite several insurers having announced in January that they would be discontinuing interest-sensitive products that offered high guaranteed rates, the report said.
At least four firms — Nan Shan Life Insurance Co (南山人壽), Shin Kong Life Insurance Co (新光人壽), China Life Insurance Co (中國人壽) and Fubon Life Insurance Co (富邦人壽) — had announced that they would stop selling life insurance policies that guaranteed rates higher than 2.9 percent, saying that the products were barely profitable due to the higher hedging costs to counter the foreign-exchange risks.
“Their announcements did not curb the overall sales of interest-sensitive policies, but instead encouraged consumers to purchase more of the product from other insurers, as people assumed that the policies were lucrative and did not want to miss out,” an association official surnamed Chung (鍾) said by telephone.
“The announcements were similar to hunger marketing as they effectively triggered consumers’ interest in the product, although insurers did not do it on purpose,” Chung said.
Sales of investment-linked policies dropped substantially in the first seven months, as they offered lower returns than the traditional life insurance policies, he said.
Last year, sales of investment-linked policies reported stable growth amid the booming financial markets, but insurers this year have found it more difficult to sell products with good returns, given the volatility of the financial markets due to unending US-China trade tensions and surprising interest rate cuts in a few countries.
As a result, investment-linked policies accounted for 20.9 percent of the total number of insurance policies as of the end of last month, down from 25.9 percent a year earlier, the report said.
Overall, the FYPs generated from all insurance policies increased 6.4 percent year-on-year to NT$726 billion in the first seven months, the report said.
“Consumers preferred the traditional life insurance policies to the investment-linked products in the first seven months of this year, a trend that is forecast to continue unless there is an improvement in the financial markets,” Chung said.
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