Taiwan formally became an aged society in 2018, so in order to further strengthen the safeguards that insurers have in place to protect the right of elderly consumers to purchase insurance, the FSC is encouraging insurers to adopt stronger measures for the protection of elderly consumers. On 29 March 2022, the FSC amended the "Regulations Governing Pre-sale Procedures for Insurance Products" and the "Regulations Governing Business Solicitation, Policy Underwriting and Claim Adjusting of Insurance Enterprises," and on 31 March amended the "Directions for the Review of Life Insurance Products," the "Directions for Sale of Investment-linked Insurance Products," and the "Compliance Matters for Disclosure of Information on Investment-linked Insurance."
Key points of amendments to provisions in the aforementioned legislation pertaining to protection of the interests of elderly consumers include the following:
1.Improve KYP measures related to product design:
(1)When an insurer engages in product development, it must assess the potential impact of a product's characteristics upon customers aged 65 or older and various adverse factors. Assessments must address the question of whether a product is suitable for sales to customers aged 65 or older.
(2)Before an insurer begins selling an insurance product, it must hold awareness activities for its solicitors and cooperating sales channels to discuss whether particular products are suitable for elderly customers, identify the types and characteristics of customers for which they are unsuitable.
(3)After an insurance product has been sold, an insurer must periodically reassess whether the product has any adverse impact on elderly customers, and whether the firm has failed to ensure product suitability according to policyholder disputes in the past.
2.Improve KYC measures related to solicitation and underwriting procedures:
(1)An insurer must require its solicitors and underwriters to take part each year in training activities that focus on fair treatment of customers aged 65 or older.
(2)Solicitors and underwriters must assess whether customers aged 65 or older have the ability to recognize circumstances that are adverse to their interests as insurance customers. In solicitation reports, solicitors must also clearly set out the assessment results and the reasons therefor.
(3)The threshold age of elderly customers which requires the process for sales of traditional insurance products must be recorded in audio or audio-video format, and enhanced assessing of product suitability in underwriting procedures is lowered from 70 to 65.
(4)For any customer who is aged 65 or older and has purchased an insurance product with non-forfeiture value, an insurer must interview the customer via telephone, video call, or other remote means both after the sale and before commitment to insure.
3.Improving disclosures related to investment-linked insurance:
(1)For any customer who seeks to purchase an investment-linked insurance product, an insurer must provide a recommendation slip, and the recommendation slip must be compliant with applicable requirements regarding the manner in which it discloses policy account value in each policy year.
(2)For any customer who is 65 or older or has a physical or mental disability and seeks to purchase an investment-linked insurance product, an insurer must provide friendly measures to help them read sales literature easily.
4.Date of implementation: The FSC has granted a 6-month buffer period before enforcement of strengthened KYP and KYC measures set out in the aforementioned legislation, which will enter into force from 1 October 2022.