Taiwan general insurance to exceed $11 billion by 2027 in spite of geopolitical tensions | Insurance Business Asia
Taiwan general insurance to exceed $11 billion by 2027 in spite of geopolitical tensions
Strong CAGR of 6.4% comes in the face of cut coverage and invasion fears
The Taiwanese general insurance sector is poised for robust expansion in the following years, projected to attain a compound annual growth rate (CAGR) of 6.4% from TWD248.1 billion ($8.4 billion) in 2023 to TWD317.8 billion ($11.3 billion) in 2027 in terms of gross written premiums (GWP).
Insights gleaned from GlobalData’s database reveal that the general insurance industry in Taiwan is anticipated to see a 6.2% growth in 2023. This surge will be supported by an upswing in new vehicle sales and escalating demand for private health insurance. This growth also comes despite rising geopolitical tensions involving China.
The driving force of the Taiwanese general insurance arena remains motor insurance, anticipated to hold an estimated 50% share of the GWP in 2023. This segment is predicted to grow by 6.1% in 2023, bolstered by an uptick in vehicle purchases. Official data from Taiwan’s Directorate of Highways indicated a 15% surge in total vehicle sales, reaching 277,216 units between January and July 2023, a notable increase from the 241,343 units sold in the corresponding period of 2022.
Recent regulatory enhancements have also propelled growth in the motor insurance domain. As of June 2023, the Ministry of Transportation and Communications (MOTC) mandated passenger liability insurance for taxi and intercity bus operators. This legislative shift is poised to further bolster the motor insurance sector, predicted to attain a CAGR of 6.7% over 2023 to 2027.
“Taiwan’s general insurance industry expanded by 6.1% in 2022, following a remarkable double-digit growth of 10.1% in 2021,” said Aarti Sharma, insurance analyst for GlobalData. “The industry’s growth rate in 2022 was tempered due to uncertainties in the global economic landscape, geopolitical factors, and the devaluation of the Taiwanese dollar against the US dollar. A similar trajectory of growth is projected over the ensuing five years, thanks to advantageous regulatory changes and government initiatives.”
Upticks for property, PA&H sectors
Property insurance holds the position of the second-largest line of general insurance, with an estimated 18.9% share of GWP in 2023. Fire and natural hazard insurance will constitute 80.7% of the total property insurance premiums in 2023, given Taiwan’s susceptibility to natural catastrophes like earthquakes, landslides, and floods.
The escalating trajectory of property insurance is further driven by the burgeoning commercial construction sector, anticipated to achieve an average annual growth rate of 3.5% over 2024 to 2027. Consequently, property insurance is forecasted to realize a CAGR of 6.1% between 2023 and 2027.
Non-life personal accident and health (PA&H) insurance is projected to contribute 10.3% to the GWP share in 2023, poised to record a CAGR of 5.3% from 2023 to 2027. The catalyst for this growth lies in heightened health awareness post-pandemic. Rising medical costs, limitations in public healthcare coverage, and prolonged waiting times have engendered heightened demand for private health insurance in Taiwan.
In 2022, the expansion of PA&H insurance was overshadowed by elevated claims payouts from previous years, resulting in amplified losses for insurers. According to GlobalData, gross claims surged from TWD11 billion ($391.2 million) in 2021 to TWD166.6 billion ($5.589 billion) in 2022, primarily due to the settlement of COVID-19-related claims. Consequently, gross claims in the general insurance industry swelled from TWD103 billion ($3.7 billion) in 2021 to TWD307.4 billion ($10.3 billion) in 2022.
Financial lines, liability, marine, aviation, transit (MAT), and miscellaneous insurance are projected to collectively comprise the remaining 20.7% share of general insurance GWP in 2023.
“Favourable regulatory shifts and governmental initiatives are poised to sustain the growth of Taiwan’s general insurance industry. However, rising economic and geopolitical uncertainties, coupled with escalating losses, will pose challenges for insurers,” Sharma said.
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