On June 3, 2025, Taiwan's Legislative Yuan passed amendments to the Insurance Act, which are expected to take effect as early as July 2025. The key points of the amendments are as follows:
- Exemption of Certain Insurance Policies from Compulsory Enforcement
Previously, creditors could file a petition for compulsory enforcement against a debtor's personal insurance policies, while there was controversy over whether courts could issue enforcement orders to terminate personal insurance contracts.
Following a decision by the Civil Grand Chamber of Taiwan's Supreme Court, which held that courts could issue enforcement orders to terminate life insurance contracts (a type of personal insurance) where the debtor is the policyholder, thereby requiring the insurer to pay the surrender value to the creditor—the Insurance Act being amended.
The amendments stipulate that only surrender values of life insurance and annuity insurance policies above a certain amount may be subject to seizure or compulsory enforcement. Surrender values of other personal insurance policies—including health and personal injury insurance - as well as policies designated by Taiwan's Financial Supervisory Commission (FSC), shall not be subject to seizure or compulsory enforcement.
- Right of Intervention Mechanism
A new provision introduces the right of intervention. Before an insured event occurs, if (1) the surrender value of a life insurance policy where the policyholder is the debtor is seized, or (2) the policyholder is declared bankrupt, specific individuals may apply to change the policyholder by providing written notice to the insurer, provided they have obtained written consent from both the original policyholder and the insured.
- Strengthening Insurance Supervision
The amendments stipulate that insurance companies must establish internal operational procedures and systems when outsourcing services. Violations may result in fines ranging from NT$600,000 to NT$12 million.
- Allowing Consumers to Purchase Foreign Insurance
According to Article 167-1 of the Insurance Act, any insurer not licensed by the FSC may not act as an agent, broker, or solicitor of foreign insurance policies within Taiwan. Violators may face up to three years in prison and fines ranging from NT$3 million to NT$20 million.
However, under the new amendments, if the purchase of foreign insurance aligns with government policy and the insurance is designated by the FSC, consumers will be allowed to purchase such insurance from foreign insurers through local insurance brokers without being subject to the above restrictions.
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