Taiwan’s insurance regulator will implement measures to assist insurance companies in adopting IFRS 17, enhancing their flexibility and supporting sustainable operations.
Ms Shih Cheung-hwa, Director-General of the Insurance Bureau of the Financial Supervisory Commission (FSC), said this yesterday when she reiterated that the FSC The implementation of International Financial Reporting Standard 17 is giving insurers 15 years to implement transitional measures to enable a smooth transition to the new regime.
He said South Korea has announced a 10-year transition period, while Japan implements the ICS and will announce a transition period next year.
Taiwan’s insurance industry is set to adopt IFRS 17 with the New Generation Solvency System (TW-ICS) on January 1, 2026, which is based on the Insurance Capital Standard (ICS) 2.0 issued by the International Association of Insurance Supervisors (IAIS).
Ms. Shih said that there are currently 14 life insurance companies with high interest rate policies and mandatory dividend policies of more than 6%, which are significantly higher than the current interest rates. This is a special situation for Taiwan. Keeping in mind its low liquidity characteristics, FSC will provide a relaxation of 0.5 percentage points in the interest rate to reduce the burden on the industry.
Just as the US Federal Reserve has continuously increased interest rates by 21 points, that is, the interest rate has increased by 5.25%, the Taiwan Central Bank has also increased interest rates by three points. Ms Shih said industry players had pointed out that the sharp rise in interest rates had adversely impacted asset valuations, and considering the matching of assets and liabilities, the FSC was considering a 15-year period to phase out the risk weighting on assets. Will provide period.
Ultimately, as interest rate risk measurement standards increase, this will become a greater challenge for the life insurance industry. The FSC pointed out that the capital adequacy ratio (RBC) will also increase linearly from 50% to 100% over 15 years, and the industry will gradually strengthen its control over interest rates.
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