Page 23 - WTW Asia Insurance Market Report
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The flooding of both domestic and international capacity          Tainan, resulting in property losses of approximately USD
into the market created a very soft insurance market in           500 million, majority of which was incurred by the Hi-tech
2016. Rates decreased across most product lines except            industry. Most of these losses were absorbed by local
for mega-size property accounts, Natural Catastrophes             insurers. Sharp rate increases were observed on some
and Power Plants. A number of underwriters withdrew from          renewal accounts due to the compound impact of the
Taiwanese business because it was not profitable enough to        earthquake or fine loss and the new regulation.
write. No fundamental changes in the market are expected
in the coming year unless major events occur.                     Another significant loss that took place was a major fire
                                                                  in a Taiwanese hi-tech company at the end of April that
Due to the economic slowdown, there has been a decline in         resulted in a USD 70 million loss. Two power stations in
GDP growth and a reduction in investment into Taiwan. Stiff       Taiwan broke down in the first half of the year, resulting
competition, combined with a dearth of large projects for         in a combined loss of over USD 20 million. In September,
the past 3 years, is expected to provide mid-size loss free       the super typhoon Meranti caused large-scale damage
property accounts with reductions of up to 20% when they          and chaos with wind speeds of up to 230 miles per hour
are renewed. For mega-size loss free property accounts with       and torrential rains. It resulted in the collision and collapse
layering structure, renewals have increased by 5% to 10% due      of a crane at Kaohsiung Port, the estimated market loss
to the implementation of a new regulation on primary layer        being no less than USD 30 million.
pricing, which is currently retained by local insurers. From the
start of 2016, regulators have insisted that local insurers must  The outlook for the catastrophe risk insurance market
have a 30% A-rated reinsurance quote as lead terms.               following these significant losses is that underwriters will
                                                                  be more conservative on the pricing and capacity offered.
There have been a number of major losses in 2016. In
February, an earthquake struck the Taiwanese city of

             Expanded Scope of Online                                      Credit
             Insurance Business                                                                                                        due to

The Financial Supervisory Commission (FSC) is                              Insurance overcapacity
encouraging insurance companies to engage in online                                                                                    from
insurance business. Directions governing E-Commerce                                                                                    international
of Insurance Enterprises have also been amended. Key                        10% markets
points of the amendment include expanding the types of
insurance products, adding insurance services and revising        Reduction of Personal Accident
eligibility restrictions for accessing online insurance           Insurance Premium
services, simplifying procedures of inquiry for e-certificates
and removing the requirement for insurers for telephonic          In recent years, the accidental death rate of personal
confirmation of purchase volition. This move is expected          accident insurance underwritten by non-life and life
to make it easier for people to buy insurance online and          insurers has been stable. As such, the FSC promulgated
demonstrates the movement of e-commerce into the                  that, effective from 1 January 2017, the incidence rate of
insurance industry. As the market continues to grow and           PA insurance (excluding travel insurance) be fixed between
develop, insurers will have to find ways to differentiate         24.543‰ and 65.448‰, to serve as a reasonable range
themselves in the online marketplace in the coming years.         for insurers to set pure premium rates. The implementation
                                                                  of this measure is expected to either reduce PA insurance
10%-40%                                                           premium rates or increase the extent of cover available for
                                                                  the same amount of premium, both of which are beneficial
                                                                  to the customer.

         Marine  due to
         Hull    reduction in
                 value of vessel

                                                                  23Asia Insurance Market Report 2016
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