Why Taiwan’s non-life insurance sector maintains steady growth

AM Best says the non-life sector is supported by stable underwriting performance.

Taiwan’s non-life insurance sector will likely keep steady premium growth and solid operating results, reflecting a stable outlook, according to AM Best.

The sector recorded double-digit growth in direct premiums written in the first half of 2025, continuing the strong momentum of recent years. 

This performance compares well with Taiwan’s economic outlook, with the IMF expecting real GDP growth of 3.7% in 2025 before easing to 2.1% in 2026.

Growth is being driven mainly by commercial fire, engineering, and accident and health lines. 

Engineering insurance continues to benefit from infrastructure and renewable energy projects, as well as expansion in high-tech industries. 

Travel insurance is also recovering, with overseas travel in 2025 expected to exceed 2019 levels. 

Commercial fire reinsurance costs remain high despite easing global rates, and these costs continue to be passed on to policyholders.

Industry profitability remains healthy. Insurers have strengthened underwriting discipline following pandemic-related losses, and the segment posted an average return on equity of 16% in 2024. 

Motor insurance continues to deliver stable results, whilst commercial fire offers higher but more volatile margins. 

Personal lines competition is increasing, with insurers investing in digital tools for online policy issuance, claims services, and customer acquisition.

Regulators have introduced updates to electric vehicle and medical insurance rules to improve product quality and risk control. EV motor policies now include coverage for batteries and charging equipment, with rates tailored to specific risks. Tighter rules for medical insurance claims took effect in July 2024 to curb moral hazard.

Taiwan plans to adopt IFRS 17 and its new TW-ICS solvency regime by 2026. 

The Financial Supervisory Commission is taking a phased approach to implementation, and AM Best expects rated non-life insurers to maintain adequate capital levels under the new rules. 

The shift is not expected to cause major changes in reported net assets, although both assets and liabilities are likely to decline moderately.

Natural catastrophe exposure remains a key concern. Recent events such as the 2024 Hualien earthquake, the 2025 Tainan-Chiayi earthquake, and several major typhoons underline persistent risks. 

Insurers have kept net losses under control through conservative reinsurance programmes, although higher catastrophe losses have added cost pressure for commercial fire and engineering lines.

Capital market and currency volatility also present risks to investment income. 

The Taiwan dollar has seen sharp swings in 2025, influenced by investor sentiment and uncertainty around US trade policy. 

The sector held about 15% of its investment portfolio in foreign assets in 2024 and continues to use FX derivatives with high hedging ratios. AM Best expects insurers to manage FX exposures prudently.

AM Best says the non-life sector continues to show resilience, supported by stable underwriting performance, cautious risk management, and ongoing premium growth.