Gradual Liberalization for Online Insurance

Taiwan online insurance

The industry looks forward to potential further opening later this year.

In AmCham’s Taiwan White Paper for the past several years, the Insurance Committee urged the government to enable consumers to purchase relatively simple types of insurance more conveniently online. For example, the Committee’s position paper suggested revision of a regulation requiring online purchasers of insurance policies to use “digital signatures” on their applications. Because of the complicated and cumbersome registration and authentication process involved, that requirement discouraged many potential customers from utilizing the e-commerce channel.

Since then, the Insurance Bureau (IB) under the Financial Supervisory Commission has begun to take steps aimed at facilitating the online purchase of certain types of insurance policies. Under new regulations announced in August last year, for instance, it allowed existing customers of an insurance company to use the internet to purchase additional travel insurance, term life, and accident insurance.

Members of the insurance industry, however, consider that the scope of the liberalization remains too narrow. One reason is that while the new regulations eliminated the need for a digital signature, the requirement was replaced by an equally complex two-stage process in which consumers twice need to obtain a one-time password (OTP), first to register as a member of the system and then again to carry out the transaction.

Other limitations imposed by the regulator have also constrained the growth of the online business. The amount of travel insurance that one person can buy from a single company was capped at NT$6 million in benefits, or a maximum of NT$10 million from all providers. For accident and term life, the benefits cap was set at NT$1.5 million from a single company – too low a level to attract much consumer interest.

In late December the IB issued phase-two regulations, which slightly widened the scope of eligibility for online purchasing. Besides existing policy-holders, the revision opened the market to new customers paying for the transaction with a credit card or through a bank account.

Now discussion is under way among industry representatives, working in consultation with the Life Insurance Association of the Republic of China and the Taiwan Insurance Institute, on proposals to present to the IB for phase-three regulations, perhaps to be implemented in the middle of this year. Among the recommendations being considered are opening the ecommerce channel to health-insurance products, raising the benefits cap on online insurance purchases (whether the customer is buying from one or multiple companies), and streamlining the transaction process from two steps to one.

Industry has suggested that the regulators follow the models in place in such other jurisdictions as the United States, United Kingdom, Hong Kong, and New Zealand, which have provided for system security while also assuring market growth and customer convenience.