Local life insurance companies might see revenue growth decelerate this year as salespeople would not be able to make face-to-face contact with their clients due to the COVID-19 pandemic, although more consumers are likely to buy insurance online, the Financial Supervisory Commission said in a report submitted to the Legislative Yuan’s Finance Committee yesterday.
Insurers have paid a total of NT$28.96 million (US$955,586) in compensation to people who were hospitalized or whose flights were canceled due to the outbreak, the report said.
The figure is not expected to soar, given the slow growth in the number of infections, it said.
However, the pandemic would have a stronger effect on insurers’ capital structure due to recent equity sell-offs worldwide, as life insurance companies usually have considerable holdings of domestic and foreign stocks in their investment portfolios, the report said.
As a result, global financial market volatility is likely to pose challenges for insurers, affecting their net worth due to the falling value of their investment portfolios, it said.
Under a new measure that is to take effect on Wednesday next week, life insurers would be required by the commission to maintain an equity-to-assets ratio of more than 3 percent, or they would need to inject new funds to increase their capital buffers.
Last year, all life insurers met this requirement, commission data showed.
The economic disruption associated with the pandemic combined with a collapse in oil prices and subsequent extreme volatility in capital markets are to have severe implications for financial markets worldwide.
The report said that market volatility has also negatively affected the net worth of funds operated by fund management companies.
In comparison, stock brokerages are to face fewer challenges, as about 70 percent of investors place electronic orders and the growing turnover would help brokers earn more handling fees, although they still need to hedge further against potential risks due to the volatility, it said.
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