Life insurers’ first-year premiums (FYPs) last month declined 22.19 percent annually to NT$74.37 billion (US$2.45 billion), as people lost interest in products with lower returns, the Life Insurance Association said in a report, adding that it was the second consecutive month that FYPs had fallen.
Cathay Life Insurance Co’s (國泰人壽) FYPs dipped 23.7 percent to NT$10.66 billion, Nan Shan Life Insurance Co’s (南山人壽) decreased 50 percent to NT$9.09 billion and Shin Kong Life Insurance Co’s (新光人壽) fell 12.91 percent to NT$6 billion, association data showed.
Fubon Life Insurance Co (富邦人壽) bucked the trend with a mild increase of 1 percent to NT$11.02 billion, the data showed.
In the first two months of this year, total FYPs plunged 33.7 percent year-on-year to NT$153.86 billion as sales of traditional life insurance policies fell 33 percent to NT$124.39 billion and sales of investment-linked products (ILPs) fell 35.1 percent to NT$29.47 billion.
ILP sales declined as insurance companies offered lower investment returns after the Financial Supervisory Commission required that target-maturity bond funds be linked with policies that only invest in bonds with ratings of “BBB” or higher, the association said.
The retreat in FYPs for traditional life insurance policies could be attributed to insurers continuing to decrease the products’ declared interest rates, which determine the bonuses that policyholders would gain, it said.
Declared interest rates for most New Taiwan dollar-denominated interest-rate sensitive policies provided by major insurers were lowered to 2.1 percent last month, from a range of 2.15 to 2.25 percent a month earlier, the data showed.
Sales were also affected by the commission’s policy to reduce insurers’ liability reserve interest rates by 25 basis points from Jan. 1, which caused an average increase of about 2 to 3 percent in premiums for new policyholders, the report said.
Consumers might remain indifferent to traditional life insurance products, as insurers must comply with a new regulation that is to take effect in July prohibiting them from offering unrealistically high returns, the report said.
The factors that weakened the momentum of life insurance sales in January continued to weigh on the industry last month, the association said.
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