AM Best has assigned a stable outlook to the Taiwan non-life insurance market and underlined how the country has, relative to its peers, remained resilient to the challenges of the COVID-19 pandemic.
In the first half of 2020, AM Best says total non-life insurance direct premium written (DPW) grew by 6.4% year on year, supported by a steady demand in key product lines including health, fire and engineering, and voluntary motor.
Investment in infrastructure and green energy initiatives, when coupled with stable insurance demand from large commercial accounts, have continued to boost insurers’ premium revenue in the fire and engineering lines over the past few years.
AM Best also underlines how motor business benefitted from a stable level of new auto sales, as well as a rise in demand for third-party liability cover.
To help alleviate losses shouldered by farmers as a result of weather-related and environmental perils, the government enacted an agricultural insurance law in May 2020 that mandated a more robust regulatory framework for product coverage, subsidies, and created an agricultural insurance fund.
As a result, major non-life companies have participated in various pilot initiatives to offer insurance cover for named crops over the past few years.
As such, AM Best expects that agricultural insurance penetration in Taiwan will gradually increase and contribute to a higher premium volume over the medium to long term.
Additionally, AM Best notes how non-life insurers in Taiwan have appropriate reinsurance programmes in place, including catastrophe excess-of-loss treaties, to protect their balance sheet against undue event risks.
Insurers also place strong emphasis on measuring and controlling their catastrophe risk accumulation, while catastrophe modelling results are reviewed and taken into consideration when structuring reinsurance programmes.
