2012-12-31
Insurance Industry May Face Restructuring Due to Laws and Increased Costs
The chairman of the Insurance Brokerage Association of Taiwan recently stated that because laws are becoming increasingly strict, insurance brokers are facing greater pressures than insurance agents to upsize and specialize. The Insurance Bureau has arranged meetings with insurance brokers and agents; however, because insurance brokers and agents are not insurance companies, they are not experienced in dealing with government bureaucracies. Further, in this case, the issues involve highly specialized topics of internal audit and control, and thus, the likely effectiveness of these meeting is uncertain.
According to statistics provided by the Financial Supervisory Commission, there were 41 fewer insurance brokers established to do business as companies in November 2012 than there were in February 2011. However, there were 40 more insurance brokers who operate as individuals in November 2012 than there were in February 2011. In comparison, the same statistics for insurance agents had no material change.
The chairman of the Insurance Brokerage Association explained that under the law, insurance agents are extensions of insurance companies. When a problem occurs, the insurance company will jointly bear liability. However, insurance brokers represent the insured. When a problem occurs, the insurance broker is solely liable and faces greater pressure than the insurance agent.
He further commented that requiring insurance agents and brokers to implement internal audit and control does benefit consumers and promotes the upsizing and specialization of insurance brokerage companies. However, when combining the cost of implementing internal audit control systems with the additional costs imposed on insurance brokers, it will be difficult for small-sized insurance brokerage companies to survive in the market.
As the result, the chairman of the Insurance Brokerage Association foresees that the number of insurance brokerage companies will decrease, and the number of insurance brokers who work as individuals will increase.
Search
English