Taiwan’s insurance industry is likely to see their assets grow next year amid a stable economy at home and continued normalization of monetary policy abroad, KPMG Taiwan said in an annual report released yesterday.
The sector’s collective profit exceeded NT$300 billion (US$9.24 billion) in the first eight months, already higher than the whole of last year, the consultancy firm said, citing data from the Financial Supervisory Commission.
The improvement came after global economic conditions and financial markets turn favorable this year, compared with last year, KPMG analyst Joyce Tsai (蔡珮汝) said, as major central banks cut interest rates after inflationary pressures mitigated.
Photo: Taipei Times
Monetary tightening hurt the value of bond holdings and prompted corporate and retail investors to hold onto cash, ominous for sales of insurance policy and wealth management as a whole.
The economic scenes look stable moving forward, as the US Federal Reserve would further lower interest rates like peers in Europe and elsewhere, in the absence of major surprises, KPMG said.
The backdrop is positive for the sector to augment its assets, which picked up 3.8 percent last year to NT$35.38 trillion, it said.
The volume accounted for 33.72 percent of the assets for the entire financial industry, slowing from 34.17 percent one year earlier, as insurers have not fully emerged from global monetary tightening and structural changes.
Taiwan notched 14th last year in premium rankings, down from 11th place one year earlier, with its market share falling from 1.28 percent to 1.09 percent on the world stage, the report pointed out.
At the same time, insurance penetration dropped from 11.4 percent to 10.3 percent of the nation’s GDP, sliding from fifth to sixth globally and behind Hong Kong and South Korea in the region, it said.
Taiwan retained the world’s leading position for 13 years by measure of insurance penetration until 2020 when low interest rates and regulatory restrictions regarding bond holdings dampened the appeal of unit-linked insurance policies, formerly a popular investment tool among Taiwanese, analysts said.
Taiwan’s super-aging society poses a challenge and presents an opportunity for insurance players, another KPMG analyst Michael Lien (連宏銘) said.
The world population is aging, but the phenomenon is more poignant in Taiwan where the proportion of people aged 65 and older is expected to hit 20 percent next year, Lien said.
The demographic trend is unfavorable for doing business generally but suggests need for life planning and risk management, Lien said.
The insurance industry could develop financial products to help people cope with the evident and inevitable needs, Lien said.
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