Major life insurance companies yesterday welcomed the government’s planned regulatory easing that would allow them to expand into non-life insurance businesses, including public construction projects.
The plan could channel about NT$1.4 trillion (US$46.62 billion) in funds into public construction projects, or 10 percent of the sector’s working capital, Life Insurance Association of the Republic of China (壽險公會) chairman Hsu Shu-po (許舒博) said.
LEGAL BARRIERS
“Life insurance companies are willing to join public construction projects if the government could remove the legal obstacles and allow reasonable room for profitability,” Hsu said by telephone.
A more liberal interpretation of existing rules would provide governments on different levels the funds needed to strengthen infrastructure facilities and create job opportunities, while the life insurance industry could benefit from having new channels to utilize their idle funds, Hsu said.
In China, insurance funds are used in the development and management of scenic resorts and popular tourist attractions, Hsu said, adding that Taiwan can do the same without straining the state’s coffers.
Cathay Life Insurance Co (國泰人壽), the nation’s largest insurer by market share and the main subsidiary of Cathay Financial Holding Co (國泰金控), would support public construction projects that would benefit the company and society, Cathay Financial spokesman Alan Lee (李偉正) said by telephone.
Last year, Cathay Life won a 30-year lease for NT$420 million from the Greater Taichung Government to develop a vacant plot in the booming seventh redevelopment zone and turn it into retail space that will be used by the Swedish home furnishings giant Ikea.
The joint venture is a win-win model for all parties involved, government officials have said, with the Taichung government receiving royalty fees, the insurer rental income and Ikea a new space to better serve customers in central Taiwan.
PUBLIC PROJECTS
Cathay Life’s interest is not limited to commercial property development, Lee said, adding that insurance companies abroad take part in public projects such as building highways, incinerators and pollution prevention facilities.
“We will not stay on the sidelines after the government finalizes details on the regulatory easing,” Lee said by telephone.
Shin Kong Life Insurance Co (新光人壽), the flagship unit of Shin Kong Financial Holding Co (新光金控), voiced similar views.
“Shin Kong Life is assessing cooperation opportunities nationwide that meet its investment needs,” Shin Kong Financial spokesman Sunny Hsu (徐舜鋆) said by telephone.
Shin Kong Life would confine its role to property development to keep its investments less complicated, Hsu said.
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