The 921 earthquake has cost life insurers NT$2.5 billion, according to the latest statistics from The Life Insurance Association of the Republic of China (
According to a preliminary report from life insurers, the first year premium (FYP) (premiums paid by new customers) during the first three quarters of 1999 has been down 0.1 percent over the same period last year. For the first time in 28 years the growth rate for the fourth quarter may be in negative territory. The first year premium in September of the largest three life insurers, Cathay Life (國泰?H1?, Nan Shan Life (南?s?H1? and Shin Kong Life (新光?H1?, has dropped in the aftermath of the quake. However, Aetna Life (|w泰?H1?, the fourth largest life insurer, has managed a growth rate of 43.6 percent over the same period last year.
Although the FYP in the first three quarters has seen a relatively insignificant decrease, the reshuffle among the major life insurers has been quite dramatic. The largest life insurer, Cathay Life, has decreased 23.2 percent in its FYP so far this year. The third largest life insurer, Shin Kong Life, had a decrease in FYP of 11.7 percent this year. The largest portion of the market is taken up by smaller players, most of which enjoyed double-digits growth in the same period.
The only exception is Nan Shan Life, which is a subsidiary of American International Group (AIG). It's FYP grew a hefty 14.7 percent in the first three quarters. Aetna Life, the fourth largest life insurer, has had FYP growth of 59.1 percent this year. The contrast among the largest four life insurers in Taiwan could be a sign of future trends in Taiwan's life insurance market. The two foreign-owned life insurance companies are catching up with the two local life insurance giants. Their position might reverse completely in the next five years, said an insurance analyst.
The highest growth rate in FYP this year has been China Life's (??國?H1? 94.6 percent. The second highest growth rate has been Fubon's (富??H1? 66.3 percent. Life Insurance Co of Georgia (3鴘v亞?H1? and Global Life (環2y?H1? also grew at 34.7 and 57.5 percent respectively.
"When foreign life insurers enter the Taiwan market, they tend to offer more attractive life insurance policies than many local insurers. If Taiwan is able to enter the World Trade Organization in the near term, there will be even more foreign life and non-life insurers coming and competing in the market. Honestly speaking, I am pretty worried for many local life insurers," said an executive of a foreign insurance group who declined to be named.
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