The Financial Supervisory Commission (FSC) yesterday said that it is considering raising the cap on sales of insurance policies denominated in foreign currencies from 35 to 40 percent, which would allow life insurers an additional NT$690 billion (US$24.36 billion) of overseas investment.
Although the central bank in November last year recommended that the commission increase the cap to 45 percent, the commission does not approve of a sudden increase of 10 percentage points, as even a change of 1 percentage point can markedly affect the market, Insurance Bureau Director-General Shih Chiung-hwa (施瓊華) told a news conference in New Taipei City.
“We will elevate the ceiling in increments — five percentage points will be enough for now,” Shih said.
Photo: Kelson Wang, Taipei Times
So far, no major life insurers have reached the limit, but a few middle-sized players have approached it, she said, adding that the bureau would announce a final decision in the next month or two.
A preliminary assessment has shown that if the limit was raised to 40 percent, life insurers could invest NT$690 billion more abroad without it being counted as part of their overseas investments, Shih said.
The central bank last year advised the commission to raise the cap, allowing life insurers to sell more policies denominated in US dollars so that the demand for the greenback would rise and ease the appreciation of the New Taiwan dollar.
However, a recent proposal by the Life Insurance Association prompted the commission to review its regulations, Shih said.
The association recommended that the FSC raise the cap as it expects consumer demand for policies denominated in foreign currencies to continue to grow this year, after the policies made up 60 percent of total sales last year, Shih said.
If life insurers are allowed to sell more policies denominated in foreign currencies, they must inform policyholders of the foreign-exchange risks, she added.
However, FSC Chairman Thomas Huang (黃天牧) said that he would not in the short term consider relaxing the 45 percent cap on total overseas investments that life insurance companies must follow.
“Life insurers still have demand to put their money overseas, but the demand is expected to be lower than before, as growth of first-year premiums has slowed,” Huang said.
Separately yesterday, Taiwan Fire & Marine Insurance Co (台灣產物保險) said that it has received 3 million applications for its COVID-19 insurance policy, which has garnered attention since its launch in December last year because it offers to compensate up to NT$100,000 for those in quarantine, the company said in a post on its Web site.
As the number is too high to process rapidly, the property insurer said that it plans to approve all of the applications by the end of June.
Only five policyholders have so far applied for compensation from the insurer, FSC data showed.
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