Taiwan’s worst COVID-19 outbreak has left the nation’s insurers bracing for more than US$1 billion in claims that the financial regulator is urging them to honor.
Financial Supervisory Commission Chairman Thomas Huang (黃天牧) has ordered insurers to pay out on valid COVID-19-related insurance policies after they faced criticism from lawmakers for dismissing claims, canceling policies and delaying payouts.
Insurers are looking to limit their losses on policies after underestimating the extent of the disease.
Photo: CNA
There are more than 6.3 million still active COVID-19-related policies and another million waiting for approval, the commission said.
As of Monday last week, insurers had paid out more to customers — NT$2.58 billion (US$87.9 million) — than the NT$2.12 billion in revenue they have received from premiums, the Insurance Bureau’s tallies showed.
With only about 2 percent of policies subject to claims so far and the outbreak showing no sign of abating, insurers are facing a wave of further claims next month and in July.
Speaking to lawmakers on Monday last week, Huang said that payouts would likely be higher than the NT$41 billion estimate mentioned by lawmakers.
While that is just a tiny fraction of the NT$2 trillion in net assets held by the local insurance industry, the majority of those are held by the large life insurers.
The potential claims represent about 25 percent of the assets held by property insurance companies, which were among the most active in selling COVID-19 policies.
Property insurers, which focus primarily on vehicle protection, have struggled to find growth in recent years and saw COVID-19 as a great opportunity, Taiwan Ratings Corp (中華信評) director Andy Chang (張書評) said.
When working out their risk models, many miscalculated the potential number of cases by a factor of nearly 100. They also failed to adequately estimate the necessary capital buffer.
“They shouldn’t have just said: ‘How much are our competitors selling? We want to sell that much too,’” Chang said by telephone.
Even the largest local insurers are likely to take a hit.
Claims at Fubon Life Insurance Co (富邦人壽) and Cathay Life Insurance Co (國泰人壽) could reach NT$5 billion, equivalent to about 2 percent of their net income this year, Bloomberg Intelligence analyst Steven Lam wrote in a note on May 13.
The generosity of the policies that insurers sold is a major part of the problem. Since the beginning of the COVID-19 pandemic, many companies have offered policies protecting customers against negative health impacts of COVID-19 and the associated costs.
Quarantine insurance is among the most popular. For as little as NT$666 a year, the insurers guaranteed to pay out NT$50,000 if the customer was required by the government to isolate. If the client later tested positive for COVID-19, they could get another NT$50,000.
The Life Insurance Association’s (壽險公會) statistics showed that the local insurance industry reported total premiums of NT$733.33 billion in the first four months of this year, a decrease of 20.6 percent from the same period last year, of which the first-year premiums decreased by 15.3 percent year-on-year.
The Taiwan Insurance Institute (保發中心) estimated that the industry might see total premiums decline by 18 percent this year due to a substantial drop in premiums of investment-linked insurance policies, the Chinese-language Liberty Times (sister paper of the Taipei Times) reported yesterday.
Additional reporting by staff writer
KEEPING UP: The acquisition of a cleanroom in Taiwan would enable Micron to increase production in a market where demand continues to outpace supply, a Micron official said Micron Technology Inc has signed a letter of intent to buy a fabrication site in Taiwan from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion to expand its production of memory chips. Micron would take control of the P5 site in Miaoli County’s Tongluo Township (銅鑼) and plans to ramp up DRAM production in phases after the transaction closes in the second quarter, the company said in a statement on Saturday. The acquisition includes an existing 12 inch fab cleanroom of 27,871m2 and would further position Micron to address growing global demand for memory solutions, the company said. Micron expects the transaction to
Nvidia Corp’s GB300 platform is expected to account for 70 to 80 percent of global artificial intelligence (AI) server rack shipments this year, while adoption of its next-generation Vera Rubin 200 platform is to gradually gain momentum after the third quarter of the year, TrendForce Corp (集邦科技) said. Servers based on Nvidia’s GB300 chips entered mass production last quarter and they are expected to become the mainstay models for Taiwanese server manufacturers this year, Trendforce analyst Frank Kung (龔明德) said in an interview. This year is expected to be a breakout year for AI servers based on a variety of chips, as
Global semiconductor stocks advanced yesterday, as comments by Nvidia Corp chief executive officer Jensen Huang (黃仁勳) at Davos, Switzerland, helped reinforce investor enthusiasm for artificial intelligence (AI). Samsung Electronics Co gained as much as 5 percent to an all-time high, helping drive South Korea’s benchmark KOSPI above 5,000 for the first time. That came after the Philadelphia Semiconductor Index rose more than 3 percent to a fresh record on Wednesday, with a boost from Nvidia. The gains came amid broad risk-on trade after US President Donald Trump withdrew his threat of tariffs on some European nations over backing for Greenland. Huang further
HSBC Bank Taiwan Ltd (匯豐台灣商銀) and the Taiwan High Prosecutors Office recently signed a memorandum of understanding (MOU) to enhance cooperation on the suspicious transaction analysis mechanism. This landmark agreement makes HSBC the first foreign bank in Taiwan to establish such a partnership with the High Prosecutors Office, underscoring its commitment to active anti-fraud initiatives, financial inclusion, and the “Treating Customers Fairly” principle. Through this deep public-private collaboration, both parties aim to co-create a secure financial ecosystem via early warning detection and precise fraud prevention technologies. At the signing ceremony, HSBC Taiwan CEO and head of banking Adam Chen (陳志堅)
RSS