As a result of the COVID-19 pandemic, Taiwan’s general insurance industry is expected to contract by 1.7% in 2020 for the first time since the global financial crisis – revealed data and analytics firm GlobalData.
The firm has revised Taiwan’s insurance forecast in the aftermath of the pandemic and its general insurance market is forecast to grow at a compound annual growth rate of 4.4% during 2019-2024 as per the latest data.
According to GlobalData insurance analyst Shabbir Ansari, Taiwan’s motor insurance business was adversely impacted as auto production stalled and sales stagnated after COVID-19 lockdown restrictions. Motor insurance had accounted for 53% of general insurance premiums in 2019.
Other lines of businesses in Taiwan also faced a similar impact.
Property insurance, which accounts for 19% of the general insurance market, is expected to decline in 2020. Housing transactions in six major cities declined by over 20% in May 2020, compared to the previous year – resulting in lower property insurance premium.
Meanwhile, it was noted that aviation insurance is also facing stagnancy due to restriction on domestic and international travel.
Aviation insurers face the prospect of refunding a share of premium collected due to the clause in aviation contracts which offers premium adjustments in cases where aircrafts are grounded for long periods.
Despite these short-term challenges, GlobalData expects business to recover from 2021 – led by industries such as electronics and pharmaceuticals where growth has been relatively steady.
“Taiwan’s better control over the pandemic spread means a faster economic recovery than other countries. Industries like automobile manufacturing are likely to get back on track as lockdown restrictions are removed and export resumes. For the general insurance business, it translates into a phase of stagnant growth,” said Mr Ansari.