Taiwan Insurance Market and IT Overview

by Wenli Yuan, January 4, 2010
Industry Trends
Asia-Pacific

Abstract

Taiwan is number one in the world in terms of insurance penetration. Although Taiwan's insurance industry is relatively developed, the insured amount per capita is not high, leaving significant room for growth. The premium income of Taiwan's insurance market grew from US$19.5 billion in 1999 to US$61 billion in 2008, representing a compound annual growth rate of 13.6%.

The insurance industry plays a significant role in Taiwan's economy, with the percentage of the industry's assets to the total assets of financial institutions currently exceeding 20%. In a new report, Taiwan Insurance Market and IT Overview, Celent examines the development, trends and overall outlook for Taiwan's insurance market.

After Taiwan's economy took off, people became more affluent. The Taiwanese like to save, and 10 years ago the savings rate was already about 25%. In recent years, due to increases in commodity prices, bearish stock prices, and no corresponding increase in wages, people have become more worried about their future. The financial crisis aggravated these worries. As a result, more and more people are unwilling to spend, and the savings rate has reached 30%. Suitable insurance products that can turn savings into funds for financial planning will bring opportunities for the development of Taiwan's insurance industry.

The scale of Taiwan's property/casualty insurance business is much smaller than that of the life business, and it is growing extremely slowly, experiencing a negative growth rate since 2005 and currently constituting about 1% of the GDP. However, the deregulation of premium rates represents an opportunity to develop low-cost distribution models such as direct marketing or online sales. In contrast, the percentage of the premium income from life insurance to the GDP is continuously growing, with a CAGR of 15% from 2000 to 2008.



"New products are constantly appearing in Taiwan's life insurance market," says Wenli Yuan, Celent senior analyst and author of the report. "Product innovation is an important factor that promotes the continuous development of the market."

"There are also opportunities for development in the areas of fire and earthquake insurance, due to the number of natural disasters in Taiwan, as well as annuity and health insurance," she adds.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

 

Property/Casualty Insurance

3

 

Life Insurance

4

 

Distribution Channels

5

 

Operations of Insurance Companies

5

Background

7

Market Overview

9

 

Development of Taiwan’s Insurance Industry

9

 

Growth Drivers

11

 

Insurance Institutions

17

 

Premium Income

20

Property/Casualty Insurance

22

 

Market Structure

22

 

Premium Income

23

 

Products

24

 

Claim Rate

27

Life Insurance

28

 

Market Structure

28

 

Premium Income

30

 

Products

31

Distribution Channels

35

IT Spending

38

Conclusion

41

Leveraging Celent’s Expertise

43

 

Support for Carriers

43

 

Support for Vendors

43

Related Celent Research

45

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