First-year premiums (FYPs) generated by the nation’s life insurers last month plummeted 41 percent from a year earlier to NT$94.81 billion (US$3.17 billion), the Life Insurance Association said in a report on Wednesday.
That followed a decline of 37 percent in the first quarter, the group said.
Traditional life insurance policies’ FYPs dropped 48.5 percent year-on-year to NT$40.9 billion last month, while those of investment-linked products fell 34 percent to NT$53.9 billion during the same period, following declines of 41.7 percent and 32 percent respectively in the first quarter.
An association official attributed last month’s sharp falls to life insurers continuously slashing their products’ declared interest rates — which determine the bonuses that policyholders receive — after rate cuts by the central bank and the US Federal Reserve in March.
However, FYP growth had already lost its momentum in the first quarter, as insurance products offered lower returns amid a low interest rate environment and as consumers turned conservative due to new regulations and concerns over the COVID-19 outbreak, the official told the Taipei Times by telephone.
The Financial Supervisory Commission is expected to implement new regulations in July, demanding life insurers set their declared interest rates based on interest rates of their fixed-income investment, a change that might mean lower returns for consumers, the official said.
FYPs of new products are unlikely to rebound after July, as life insurers are likely to continue cutting declared interest rates, the official added.
“We will continue to see corrections throughout this year,” he said.
In the first four months of this year, FYPs of traditional life insurance products slid 41 percent to NT$212 billion, while those of investment-type products decreased 33.6 percent to NT$99.5 billion, the association said.
However, health insurance policies saw FYPs grow 11 percent to NT$14.46 billion in the first four months of this year, as consumers became more concerned about their health insurance coverage amid the outbreak, the association said.
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