Fubon: ‘the Taiwan insurance market has grown very fast in the past few years’

Transcript

Taiwan is the second largest market in the Asia Pacific region after in Japan, in terms if insurance penetration. World Finance speaks to Executive Vice President of Fubon Life Insurance, Tsai-Ling Chao, to find out how the industry is developing.

World Finance: Well Tsai-Ling the Taiwan Insurance industry – how has it developed in recent years?
Tsai-Ling Chao: The Taiwan insurance market has grown very fast in the past few years, due to a few reasons. Number one is that Taiwan is facing an ageing population problem, which creates a very high demand for retirement planning products.

The low interest rate also makes insurance products attractive – especially the single premium endowment products that make the bancassurance channel grow very fast in the past few years.

The ageing population also creates a high demand for long-term care products.

The ageing population also creates a high demand for long-term care products.

World Finance: Well Taiwan’s government has recently unveiled measures to enhance the insurance industry’s competitive edge, in light of increasing liberalisation and vibrant growth in Asia. What’s been the knock on effect from this?
Tsai-Ling Chao: The insurance companies have varying capacity for these changes. The most popular one is that the government allowed the insurance companies to invest in international bonds issued in Taiwan, and therefore allowing the insurance companies to exclude those from the oversees investment remit.

The second one allows each company to convert insurance policies to long-term care or annuities for aged policy holders. And those policies are usually guaranteed at a very high interest rate, which will allow insurance companies to reduce the net interest spread. The government also encouraged the insurance companies to spend oversees. Taiwan is a very mature market and older insurance companies have lots of capacity, so we hope to take the opportunity to expand oversees.

World Finance: The government has also proposed plans to introduce offshore insurance units (OIU) to develop Taiwan into an international wealth management centre. Now this would create opportunities for domestic insurers to offer policies to foreign nationals, while foreign couriers can also offer products to the Taiwan market. How prepared is the industry for the competition?
Tsai-Ling Chao: The Taiwan Insurance market has a lot of experience servicing high net worth policy holders in the past few years. We can take advantage of OIU to serve high net worth policy holders better. And we can also develop insurance products to combine with good medical services in Taiwan. So we think insurance companies are ready for the OIU.

The Taiwan Insurance market has a lot of experience servicing high net worth policy holders in the past few years

World Finance: And what are Fubon Life Insurances top three priorities for the coming years?
Tsai-Ling Chao: We will continue to build up our agency force. Right now we have about 16,000 agents but most of them are gathered in the North and metropolitan areas. We will try to build more of a force in the South side.

Secondly, we will strengthen the use of technology and make sales and services more efficient.

We will look for oversees investment opportunities. We will apply for a license in Hong Kong next year, and we will look for new investment opportunities – especially in China and Asia.

World Finance: Finally, what trends do you see impacting the industry in the future?
Tsai-Ling Chao: The high net worth population will continue to grow, that will create new opportunities for insurance companies. So insurance companies will design special products and as result serve those sectors better. The insurance companies will look for oversees opportunities. The life sector will use more technology, especially focusing on online sales.

World Finance: Tsai-Ling Chao, thank you.
Tsai-Ling Chao: You’re welcome.