萬國法律事務所

On January 4, 2013, at a seminar titled “Current Challenges and Opportunities for the Insurance Industry,” Taiwan’s Financial Supervisory Commission (FSC) stated that it intends to add “Immediate Corrective Measures” (Measures) into the current draft amendment to the Insurance Act in order to strengthen the insurance conglomerate supervision mechanism.

Currently there are insurance companies that are not affected by any restrictions or regulations, despite having negative net worths. Seeking to address this odd situation, Mrs. Jih-Chu Lee, Vice Chairperson of the FSC, has announced that the FSC will establish measures that will enhance the risk management abilities of these insurance companies. One of the Measures will be the enhancing of corporate governance. Further, the FSC does not exclude the possibility of introducing the current regulatory regime that is applied to banks to the insurance industry.

The FSC has discovered that capital held by banks is now flowing to insurance companies. Total capital surpluses in insurance companies have increased to NT$ 1.4 billion, and proper utilization of this capital is an important matter.

Mrs. Yu-Chiung Tzeng, Director of Taiwan’s Insurance Bureau, stated that the FSC hopes to allow the sale and distribution of annuities insurance and long-term care insurance. In order to encourage people to apply for these types of insurance, a premium deduction of NT$ 24,000 will be applied. In light of this new policy, Mrs. Jih-Chu Lee explained that there is a consensus among the pertinent government agencies that there is a need to apply tax breaks to earnings gained from long-term care insurance. However, further discussion is needed to form a consensus regarding specific tax credits.

In addition, the Bank Bureau of the FSC has invited all banks to discuss Credit Card Debt – Credit Loan Conversion Mechanism. The Bank Bureau has announced that if a bank cannot reach the desired goal of 5% in both the “number of Credit Card Debt accounts converted” and “amount of Credit Card Debt converted” categories before the end of 2013, and cannot improve on the situation after an allocated reasonable period of time, then the subject bank will be prohibited from issuing new credit cards. If the conversion rates of both categories reach 5% to 10%, then any application to issue new types of credit cards (such as cell phone credit cards) by the subject bank at issue will be halted.

The Bank Bureau has implemented a two phase time table that requires all banks to reach a “Minimum conversion ratio”. Before the end of June 2013, one of the two categories must at least reach the 5% goal. At the end of 2013, at least one category must reach the 10% goal. The banks have discretion as to which category they seek to achieve first.