The nation’s life insurers saw their combined first-year premiums (FYPs) plunge 28.7 percent year-on-year to NT$783.71 billion (US$27.53 billion) last year, with the ratio of premiums from bancassurance to total premiums dropping to 51.61 percent, the Life Insurance Association said in a report released on Monday.
The decline in FYPs could be attributed to a reduction in declared interest rates amid a low interest environment, as the Financial Supervisory Commission implemented a rule that life insurers must set their declared interest rates based on the yields from the bonds they have invested, the association said.
Taipei Times file photo
Meanwhile, the commission has trimmed liability reserve interest rates twice, driving up the premiums clients pay for the same coverage and affecting insurers’ sales, it said.
The COVID-19 pandemic has also had an adverse impact as insurance salespeople have had to slow their marketing activities, it said.
The fall in FYPs could also be attributed to some life insurers halting sales of their disability insurance policies late last year, as the commission had considered ordering insurers to set aside a higher reserve on the product this year in light of a higher loss ratio, it said.
Traditional insurance policies’ FYPs dropped 32.9 percent annually to NT$576 billion, with life insurance products’ FYPs declining 36.5 percent to NT$477 billion, annuity insurance policies falling 18.4 percent to NT$44 billion and accident insurance products dropping 9.1 percent to NT$11 billion, it said.
FYPs for investment-type products decreased 13.7 percent to NT$207 billion, a milder fall than traditional insurance products, as investment products benefited from bull markets, it said.
BUCKING THE TREND
Health insurance policies were the only insurance policy to buck the trend, with FYPs growing 7.7 percent annually to NT$42.88 billion, as consumers became more concerned about their health insurance coverage amid the COVID-19 outbreak, the association said.
Life insurers’ FYPs are expected to rebound this year due to a low comparison base last year, but whether their sales will return to pre-pandemic levels remains to be seen, an association official told the Taipei Times by telephone.
Bancassurance continued to be the biggest channel for insurance sales, with NT$404 billion in FYPs sold for the whole of last year, accounting for 51.61 percent of all FYPs, the association said.
That ratio was slightly down from 51.95 percent in 2019, but higher than experts’ forecast that the ratio would fall to below 50 percent by the end of last year.
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