Taiwan’s life insurance companies would continue to move toward global standards in their product mix, solvency regime and investment strategy, which will enhance their resilience, Fitch Ratings said on Monday.
The convergence will include the adoption of new accounting rules, a shift to a new solvency regime and the associated changes to product mix, investment strategy and capital requirements, as well as the promotion of sustainable finance, Fitch said.
In the past few years, the Financial Supervisory Commission (FSC) has tightened regulations to prepare life insurers for new global accounting standards and migration to a new solvency regime, the ratings agency said.
Following these regulatory changes, Fitch said it has observed a favorable shift away from savings-type insurance products and toward more foreign-currency products.
The FSC has also permitted a wider investment scope to allow better asset-liability management by life insurers and promoted risk management that is more aligned with global practices, Fitch said.
The financial regulator began to address the potential capital gap well in advance by requiring life insurers to make up for the shortfall in insurance reserves and recently introduced a net-worth-to-assets ratio threshold to limit leverage, Fitch said.
The FSC might release more details on the three-stage road map it announced in July last year for the adoption of the new accounting standards and solvency regime, Fitch said.
Sustainability has also been moving up the regulatory agenda and the FSC has encouraged the development of green insurance products, it said.
Taiwan’s life insurers have begun to invest in renewable energy projects, and Fitch said it expects greater growth in green investments.
Climate-change risks are now on the regulator’s radar and will continue to grow in importance, it said.
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