The Financial Supervisory Commission (FSC) on Tuesday said it would postpone implementing a tighter capital regulation on non-life insurance companies, as insurers face considerable losses related to COVID-19 insurance policies this year.
Originally scheduled to begin at the end of this year, the regulation has been postponed to the end of 2024, the commission said.
The regulation is to require non-life insurers to set aside more capital to guard against risks of terrorist attacks and epidemics, before insurance companies are required to comply with the new Insurance Capital Standard (ICS), which is to take effect in 2026.
The commission in 2020 and last year added fire insurance, vehicle body damage insurance and engineering insurance, as well as cargo transportation insurance that covers natural disaster risks, into the non-life and reinsurance industries’ risk-capital accrual to reflect the risks involved in the industry’s operations.
The Non-life Insurance Association had urged the commission to delay the new regulation, Insurance Bureau Deputy Director-General Thomas Chang (張玉煇) said.
“Considering that ICS would not take effect until 2026, and that local non-life insurers have devoted much capital to COVID-19 insurance claims, we have agreed to delay implementing the regulation by two years,” Chang said, adding that the move reduces pressure on insurers to raise fresh capital, he added.
A preliminary assessment by the association concluded that the risk-based capital ratio of most insurers would drop by 14 to 25 percentage points if the tighter capital rule took effect this year, Chang said.
Non-life insurance companies as of Monday faced COVID-19 insurance claims of NT$100.7 billion (US$3.14 billion) owed to 2.58 million policyholders, commission data showed.
Six non-life insurers received approval to raise fresh capital of NT$70.7 billion to bolster their financial circumstances, the commission said.
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