TAIWAN Law and Practice Contributed by: Daniel T H Tsai, Lee and Li
mission from the competent authority, posted bond and obtained related insurance, and obtained a prac- tice licence before beginning business operations or practice. For more details on the qualifications and management of insurance brokers and agents, please refer to the Regulations Governing Insurance Brokers and Regulations Governing Insurance Agents. If an insurance agent or broker violates laws or regula- tions, or is suspected of improper management, then the competent authority may ‒ depending on the cir- cumstances ‒ take disciplinary action (such as issuing an official reprimand or ordering the agent or broker to take corrective action within a specified period of time). If the bank wants to sell the insurance policy on the bank counter, it will need to obtain either an insur- ance company licence, an insurance agent licence, or an insurance broker licence. The distribution of the insurance products will depend on the nature of the particular licence. 6. Making an Insurance Contract 6.1 Obligations of the Insured and Insurer According to Article 64 of the Insurance Act, when an insurance contract is negotiated, the proposer must respond truthfully to the written enquiries made by the insurer. Where there is concealment, non-disclo- sure or misrepresentation on the part of the proposer or insured in the disclosure of risk, the insurer may rescind the insurance contract within one month of becoming aware of the situation – as long as this does not occur more than two years from the date on which the insurance contract was signed. In Taiwan, the insurer is required by the FSC to include a list of questions concerning matters that would influ- ence the risk assessment in a proposal form for the insured to answer. The duty of disclosure in insurance law should also be guided by data protection regula- tions and the principle of good faith (as per the Civil Code). Although there is no clear ruling with regard to the dif- ferences between consumer insurance and commer-
cial insurance when it comes to the insured’s disclo- sure duty, in practice the court favours the consumer more in cases of consumer insurance. Therefore, in cases of commercial insurance, the insured will actu- ally be required by the court to meet a higher standard of disclosure. 6.2 Failure to Comply With Obligations of an Insurance Contract If the proposer has made any concealment, non-dis- closure or misrepresentation – and such concealment, non-disclosure or misrepresentation is sufficient to alter or diminish the insurer’s estimation of the risk to be undertaken – the insurer may rescind the contract (see 6.1 Obligations of the Insured and Insurer ). 6.3 Intermediary Involvement in an Insurance Contract In Taiwan, the “insurance intermediary” usually refers to insurance brokers and insurance agents. The insur- ance brokers need to clearly understand the needs of the proposer before further helping to choose the suitable insurance product for the insured to sign. In accordance with Article 33 of the Regulations Govern- ing Insurance Brokers and Article 33 of the Regula- tions Governing Insurance Agents, when practising or operating business, the broker must: • exercise due care as a good manager; • exercise fiduciary duties in order to uphold the interests of the insured; • ensure that they have provided professional expla- nations to the insured; and • ensure that they have disclosed all information relating to: (a) the core components of the insurance product in question; and (b) the key rights and obligations of the insured. In 2022, the FSC even amended the regulations that require insurance brokers to protect the rights of cli- ents over the age of 65 and prohibit the sale of unsuit- able insurance products to them. Although the insurance agent is the agent of the insurer according to Article 8 of the Insurance Act, the agent is considered to act on the insurer’s behalf and thus has fiduciary duties to the insurer.
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