TAIWAN Law and Practice Contributed by: Daniel T H Tsai, Lee and Li
11. Emerging Risks and New Products 11.1 Emerging Risks Affecting the Insurance Market On 21 December 2021, the FSC announced its poli- cy purpose and plans to allow online-only insurance companies to operate, while imposing a minimum capital requirement of TWD1 billion (approximately USD35.97 million). An online non-life insurer should be capitalised at no less than TWD1 billion, whereas an online life insurer’s minimum capital size has been set at TWD2 billion. The FSC also recently announced that an online-only insurance company will need to have financial institutions and financial technology providers as its shareholders. Insurance is a highly regulated industry in Taiwan and a special permit is required. Entities intending to enter the insurance market in Taiwan must comply with the numerous requirements set out in the Insurance Act, as well as other related regulations. Moreover, where foreign insurers wish to set up a sub- sidiary in Taiwan, an FIA from the IC is required in addition to the aforementioned requirements. In the past, the review and approval of the foreign invest- ment ‒ along with the verification of capital injection by the IC ‒ usually only took around three weeks. How- ever, owing to the political tension between Taiwan and the PRC, the government of Taiwan now adopts a stricter review procedure for all foreign investments in order to prevent PRC entities from investing in Taiwan under the name of shell companies incorporated in other foreign countries. 11.2 New Products or Alternative Solutions The Financial Technology Development and Innova- tive Experimentation Act (the “Experimentation Act”), effective as of April 2018, was enacted for the purpose of creating a safe environment for experimentation involving innovative financial technologies in order to develop technology-based financial products or ser- vices. In addition, the Insurance Act was also amended to allow the regulatory sandbox to encourage experimen- tation in fintech innovation. Under Article 136-1 of the Insurance Act, insurance enterprises, brokers, agents
and surveyors may apply for approval to undertake innovative experimentation within the insurance busi- ness (in accordance with the Experimentation Act) for the purpose of facilitating the development of inclu- sive finance and financial technologies. Moreover, the insurance industry is also adapting to the challenges arising from digital innovation and distance selling. Two examples that provide more instruction on digital selling and distance selling are: • the Regulations Governing Online Insurance Busi- ness and Online Insurance Services of Insurance Agent Companies and Insurance Broker Compa- nies; and • the Directions for the Insurance Enterprises Con- ducting E-Commerce. In addition, the insurance products that are denomi- nated in TWD are categorised as “financial products or services approved by the FSC to make the pay- ment through an agent” in accordance with the Act Governing Electronic Payment Institutions. Therefore, insurance customers can use electronic payment to pay premiums and other fees. In this respect, it is not only customers who will enjoy more convenience; the insurance industry ‒ along with “electronic payment institutions” ‒ may also benefit. 12. Developments in Insurance Law 12.1 Significant Legislative or Regulatory Developments In 2022, the FSC announced that it will start accepting applications for the establishment of online-only insur- ance companies from 1 August 2022 to 31 October 2022. According to Articles 29 (1) to 29 (7) of the Reg- ulations for Establishment and Administration of Insur- ance Enterprises, an insurance company that uses the internet or other electronic communication channels to sell insurance products to customers is defined as an online-only insurance company. Furthermore, the minimum paid-in capital must be: • TWD1billion for non-life insurance; and • TWD2billion for life insurance.
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