COVID-19: Domestic insurers risk reducing capital adequacy over COVID-19 compensation

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  • By Kao Shih-ching / Staff Reporter

Local insurers could see a decline in their capital adequacy due to high payouts to COVID-19 insurance policyholders amid rising national infections, the Financial Supervisory Commission (FSC) said yesterday. at a meeting of the legislature’s finance committee in Taipei.

The commission did not disclose the total amount insurers may have to pay policyholders, saying only that around 6 million COVID-19 insurance policies remain valid and the amount of compensation has not been announced. finalized.

Democratic Progressive Party lawmaker Kuo Kuo-wen (郭國文) said that since the Central Epidemic Command Center (CECC) has estimated Taiwan’s infection rate at around 15%, it is likely that 15% of the insured, i.e. 900,000 people, would contract COVID-19[FEMININE[FEMININE

Photo: Tu Chien-jung, Taipei Times

If each infected policyholder is to be compensated NT$100,000 (US$3,392) – NT$50,000 for being infected and NT$50,000 for being quarantined – the compensation would total NT$90 billion, Kuo said.

The commission said insurers must fulfill their obligation to COVID-19 policyholders, but also assess the impact of compensation on their financial strength.

Currently, the capital adequacy of all insurers is satisfactory, but an increase in local cases could put pressure on some, he said.

If an insurer’s capital adequacy falls below the minimum, a capital injection would be mandatory, but the commission would allow the insurer to use its special reserve to reverse the loss, said FSC Chairman Thomas Huang (黃天牧) during the meeting.

Local insurers must set aside a combined reserve of NT$16.1 billion for major accidents and another reserve of NT$32 billion for volatility, Huang added.

“If the number of local cases exceeds 3 million, as predicted by the CECC, some insurers may be forced to increase their capital,” Bureau of Insurance Director General Shih Chiung-hwa (施瓊華) said.

The commission said it would not ask insurers to relax their compensation conditions to reduce their financial burden.

Huang said he would not use the word “crisis” to describe the situation, but that it needs to be closely monitored.

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