The Financial Supervisory Commission (FSC) on Thursday said that from next year it would grant incentives to encourage insurance companies to design more products with protection elements, in a move aimed at improving the industry’s product mix.
Insurers launching new products with protection elements would be eligible for eased capital requirements, the commission said.
Eligible insurers could add up to one basis point to their anticipated returns, which would decrease the amount of capital that must be held in reserve to ensure that firms are able to meet their obligations to policyholders, it said, adding that reduced capital requirements would allow insurers to price their products lower, improving accessibility to consumers.
“The incentives are aimed at steering insurers toward protection products and away from heavily spread dependent savings products,” FSC chief secretary Shih Chiung-hwa (施瓊華) said at a press briefing.
The commission is hoping to encourage insurers to offer products with improved protection against injuries, illnesses and disasters to the public, Shih said.
The commission has added a lapse rate for products as a factor for determining insurers’ capital requirements.
The lapse rate measures the rate at which life insurance policies are not renewed and are terminated.
From next year, the five top-selling products at each life insurer would be tracked for the next seven years, the commission said.
Insurers selling products with a lapse rate of more than 14 percent over seven years would be required to submit an improvement plan to the commission, it said, adding that insurers selling products that rack up a lapse rate of more than 30 percent over three years would also be flagged.
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