VZCZCXRO8718
RR RUEHGH
DE RUEHIN #2388/01 1950629
ZNR UUUUU ZZH
R 140629Z JUL 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 1103
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUCPDOC/USDOC WASHDC
RUEHBK/AMEMBASSY BANGKOK 3333
RUEHBJ/AMEMBASSY BEIJING 5413
RUEHUL/AMEMBASSY SEOUL 7928
RUEHGP/AMEMBASSY SINGAPORE 6506
RUEHKO/AMEMBASSY TOKYO 7824
RUEHML/AMEMBASSY MANILA 9756
RUEHJA/AMEMBASSY JAKARTA 3885
RUEHKL/AMEMBASSY KUALA LUMPUR 3524
RUEHHI/AMEMBASSY HANOI 3094
RUEHBY/AMEMBASSY CANBERRA 4242
RUEHWL/AMEMBASSY WELLINGTON 1526
RUEHHK/AMCONSUL HONG KONG 6619
RUEHGH/AMCONSUL SHANGHAI 0233
RUEHGZ/AMCONSUL GUANGZHOU 9414

UNCLAS SECTION 01 OF 02 TAIPEI 002388 
 
SIPDIS 
 
SIPDIS 
 
STATE PLEASE PASS USTR 
STATE FOR EAP/RSP/TC, EAP/EP 
USTR FOR ALTBACH 
USDOC FOR 3132/USFCS/OIO/EAP/WZARIT 
TREASURY FOR OASIA/LMOGHTADER 
TREASURY PLEASE PASS TO OCC/AMCMAHON 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ECON TW
SUBJECT: Taiwan to Streamline Insurance Policy Review 
 
 
¶1.  Summary:  Taiwan's Financial Supervisory Commission Insurance 
Bureau (IB) announced it will streamline insurance policy reviews 
beginning September 1 in response to comments from AmCham and local 
insurance companies.  The number of new insurance products requiring 
prior review and the review time will both be cut by more than half. 
 This change should increase efficiency and profitability of 
insurance companies, but requires companies to exercise strict 
internal controls.  End summary. 
 
Insurance Policy Review Reform 
------------------------------ 
 
¶2.  In a briefing to chief executives of insurance companies on July 
11, IB Director General Thomas Huang announced that beginning 
September 1 insurance firms will not be required to obtain prior 
permission for most new insurance products.  In addition, insurance 
companies meeting certain criteria will be exempt from needing prior 
permission for new products.  These measures will reduce the number 
of insurance policies requiring prior permission by about 75%. 
 
¶3.  New non-life insurance products still requiring prior permission 
include auto insurance, fire insurance, and unprecedented types of 
insurance policies.  New life insurance products still requiring a 
prior permission include retirement annuities, investment-linked 
policies with guaranteed returns, and unprecedented types of 
insurance policies.  All new foreign currency denominated life 
insurance products will still require prior approval. 
 
¶4.  However, insurance companies will be exempt from needing IB 
permission for the above-mentioned products if they have a 
risk-based capital (RBC) ratio exceeding 250%, aggregate IB fines of 
less than NT$1 million (US$30,769) in the past year, no significant 
defects in current products, and sufficient actuaries. 
 
Less Review Time 
---------------- 
 
¶5.  Huang also said the new insurance policy review time will be 
shortened to 90-130 days, much shorter than current reviews which 
take as long as two years.  The IB must respond to a permit request 
within 90 days after the IB receives the request.  If further 
documentation is needed, the IB has another 40 days to review 
supplemental documents. 
 
Registration Requirement 
------------------------ 
 
¶6.  Insurance companies will still be required to register all new 
products within 15 days of being marketed.  The IB will then conduct 
a follow-up review sampling up to 30% of these new insurance 
products.  The IB expects insurance companies to exercise strict 
internal controls and conduct thorough evaluation before putting new 
products on the market.  For products failing to pass the follow-up 
review, the IB will impose heavy penalties, including suspension the 
privilege to put new products on the market for a year. 
 
Protection for Innovation 
------------------------- 
 
¶7.  The IB will provide six months of "innovation protection" that 
requires imitations of another company's new type insurance policy 
to seek prior IB permission. 
 
Likely Effects 
-------------- 
 
¶8.  AIT contacts at the IB were optimistic that these insurance 
reforms will allow insurance companies to better plan and market 
their new products and increase their profitability in an 
 
TAIPEI 00002388  002 OF 002 
 
 
environment that they can better control.  However, the contacts 
noted that if insurance companies fail to exercise strict internal 
controls, or if the IB fails to fulfill its regulatory duties, there 
could be serious negative consequences. 
 
YOUNG