Five local insurers are considering raising new funds to bolster their financial strength as increasing compensation claims from COVID-19 insurance policyholders are reducing their profits, the Financial Supervisory Commission said on Thursday.
Five of the six insurers with the greatest COVID-19 insurance sales — Fubon Insurance Co (富邦產險), Cathay Century Insurance Co (國泰世紀產險), Tokio Marine Newa Insurance Corp (新安東京海上產險), CTBC Insurance Co (中國信託產險), Chung Kuo Insurance Co (兆豐產險) and Hotai Insurance Co (和泰產險) — are considering new plans to raise capital, the commission said.
Two insurers plan to increase capital once their risk-based capital — a ratio of an insurer’s total capital to its required risk-based capital, signaling a company’s strength — falls below 250 percent, Insurance Bureau Deputy Director-General Chang Yu-hui (張玉輝) told a news conference.
The commission requested that insurance companies maintain the ratio above 200 percent.
The commission forecast that the capital injections would not be carried out before the end of this month, given that the total amount of compensation to policyholder is still mounting, Chang said.
Meanwhile, 10 of all 12 insurance companies that sold COVID-19 policies expect that the compensation claims from policyholders would have a limited impact on their financial profile, Chang said.
A total of 2.96 million policies had been sold in the first five months of the year, with a total premium of NT$2.45 billion, while insurers had paid NT$4.04 billion in total to 115,400 policyholders, the commission’s data showed.
Meanwhile, more than 1 million COVID-19 policies have not been underwritten by insurers, the commission said, adding that it has asked the insurers to increase staffing to expedite the underwriting.
For the whole of last year, local insurers sold 9.1 million COVID-19 insurance policies and earned premium income of NT$7.15 billion, while paying compensation of NT$2.3 billion to policyholders, the data showed.
Cumulative compensation totaled NT$6.33 billion, comprising about 66 percent of cumulative premium income of NT$9.6 billion, the commission said.
The loss ratio is predicted to continue rising this month, it said.
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