Taiwan's life insurance industry saw overall first-year premiums (FYP) increase by 6.4% year-on-year to NT$726bn ($23.58bn) in the first seven months of this year. This is according to Taipei Times citing figures from the territory's Life Insurance Association.
The report said FYPs generated from traditional life insurance policies surged by 15.4% annually to NT$506bn, and FYP from investment-linked insurance products fell 14% to NT$152 billion.
The drop in sales for investment-linked products is attributed to consumers’ preference to purchase traditional life insurance policies which offered higher returns.
Taiwanese insurers found it difficult to sell investment-linked policies (ILP) with good returns due to the volatile financial markets – a result of the ongoing US-China trade tensions and unexpected interest rate cuts in a few countries.
The sale of ILPs will continue to drop unless there is an improvement in the financial markets. Last year, ILPs reported stable growth when financial markets were flourishing.
According to the report, ILPs accounted for 20.9% of the total number of insurance policies as of the end of last month, down by 25.9% compared to the corresponding period last year.
On the other hand, sales of traditional life insurance policies picked up this year even though several insurers including Nan Shan Life Insurance, Shin Kong Life Insurance, China Life Insurance and Fubon Life Insurance had announced in January that they would be discontinuing interest-sensitive products that offered high guaranteed rates.
These announcements are said to have encouraged consumers to purchase more traditional life insurance policies from other insurers as they assumed that the policies were lucrative.
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