Thu, Apr 12, 2001 page18

• Ban on life insurance for children likely

  MORAL HAZARD The legislature is expected to pass an amendement to the Insurance Law which will ban the sale of life insurance for minors under 14 years old

  • By Stanley Chou / STAFF REPORTER
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  Sales of life insurance policies for children under 14 years old is likely to be banned once an amendment to the Insurance Law (保險法) is passed in the legislature in the near future.

  According to an agreement reached between Finance Minister Yen Ching-chang (顏慶章) and legislators earlier this week, policy sales will be banned for minors under 14 years of age.

  The ministry and legislators agreed on Tuesday that insurance companies cannot underwrite a life insurance policy for a minor until the he or she is at least 14 years old.

  The Insurance Law amendment is likely to pass its third reading during the current session, after being idle in the legislature since it was proposed in late 1999 by New Party legislator Hsieh Chi-ta (謝啟大).

  Since the sale of children's insurance policies has been an important money earner for life insurers, Hsieh's proposal to ban policies for children was strongly opposed by a number of large life insurance companies, represented by the Association of Life Insurance Companies (壽險公會).

  The proposed ban stems from one lawmaker's concern that the policies offer the possibility for a `moral hazard,' where financially desperate parents buy the insurance only to resort to murdering their offspring to collect insurance premiums.

  Life insurers claimed that the chance of this scenario taking place in Taiwan is minimal, and that it should not be banned for that reason.

  Historically, there is only one recorded case in Taiwan of a parent murdering their child to claim insurance compensation, and that was more than three decades ago. But similar cases have been discovered in western countries in recent years.

  However, Hsieh maintained her strong opposition to the policies by insisting that it's immoral to sell an insurance product that might endanger children's safety. Hsieh insists that while insurance products for children, such as accident insurance, should be allowed, life insurance policies for kids are just plain wrong.

  Hsieh has been active in the protection of children's welfare for several years.

  Meanwhile, according to one pundit, it seems that both sides have compromised on the issue.

  "The reason behind the confrontation over the children's policy is that there have not been enough [profitable] insurance products to sell," said Henry Cheng (鄭百亨), managing director of Manulife Funds Direct, which is an affiliate of Manulife Insurance Co (宏利人壽).

  "The finance ministry has been deregulating insurance products in recent months, especially insurance policies combined with investment vehicles, which should be very attractive to local consumers. Since there are going to be a lot more insurance products available for life insurers to sell, I think it's likely that they will not insist on selling children's life insurance policies," Cheng added.

  The finance ministry has approved more than a dozen new insurance policies this year, which has never happened before. "Anticipating Taiwan's entry into the WTO, the country's insurance regulatory agency has launched its deregulation without announcing it publicly. The pace is likely to accelerate after the Insurance Law is revised," Cheng said.
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