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Amendments to the “Directions for Conduct by Life Insurance Enterprises of Interest-Sensitive Insurance Products Business”

Considering the fact that Taiwanese life insurers are going to gradually adopt IFRS17 and the Insurance Capital Standard (ICS), the FSC issued an amended version of the aforementioned Directions on January 16, 2020, which will enter into force from July 1, 2020. The purpose of the amendments is to strengthen post-sale regulation of interest-sensitive insurance products (including insurance products with a credited interest rate), and to ensure safe and sound operation of the business, thereby reducing the possible impact of future adoption of IFRS17 and ICS. Key points of the amendments include the following: (1) In order to urge life insurers to establish a stabilization mechanism for credited interest rates, the amended provisions require companies, when adopting credited interest rates, to consider the coupon rate on fixed-income bonds in their segregate accounts. (2) The amended provisions set out a list of items that insurers are required to examine and evaluate at their monthly credited interest rate meetings. The purpose is to improve the scope of items that are examined and evaluated at monthly credited interest rate meetings. (3) Life insurance companies that still have distributable earnings after the end of a fiscal year are required to use a nominal tax rate (20%) in setting aside a provision to special capital reserves in an amount equal to 20% of the after-tax increase in the asset value exceeds the reserve provision in each current-year segregate account.
Visitor: 166   Update: 2020-03-06