Recently, a new type of fraud has emerged involving the sale of unapproved foreign insurance products on social media platforms under the guise of asset management and financial consultancy.
According to Article 167-1 of the Taiwan Insurance Act, any insurer not licensed by the Taiwan Financial Supervisory Commission (“FSC”) may not act as an agent, broker, or solicitor of foreign insurance policies in Taiwan. Violators may be sentenced to up to three years in prison and a fine of NT$3 million to NT$20 million.
The FSC warns consumers of five major points to be aware of when purchasing unapproved foreign insurance products:
- Consumers will deal directly with the foreign insurance company, rather than a local counterpart.
- These policies are often written in English or translated into Mandarin, which may lead to a lack of transparency and hinder full comprehension of the policy terms.
- Issuers of such products are not subject to Taiwan laws and regulations, and the policies are not protected by the Taiwan Insurance Guaranty Fund (保險安定基金).
- These policies are not recognized under Taiwan law, meaning that: (a) premiums paid are not deductible for income tax purposes; (b) death benefits, even if a beneficiary is designated, are not governed by the Taiwan Insurance Act and are not considered part of the insured’s estate.
- There is a risk of being sold fraudulent foreign insurance policies and losing premiums to fraud is significantly increased.
Consumers should remain cautious and verify the legitimacy of any insurance product before making a purchase.
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