Disqualified insurers to be forced to exit the market: FSC
By Ted Chen, The China Post
July 31, 2014, 12:00 am TWN
TAIPEI, Taiwan -- The Financial Supervisory Commission (FSC, 金管會) on Wednesday said that it is pushing for necessary amendments to current insurance laws, which will force insurers with insufficient financial strength to exit while failing to conduct immediate improvements.
FSC Chairman Tseng Ming-chung (曾銘宗) on Wednesday the commission will file the amendment proposal to the Executive Yuan in September and expected to clear the legislature's floor in the next session, implying that those amendments will get relevant government approvals before the end of this year.
He revealed that the amendments will take reference of those monitoring indicators for the banking industry. Bank of Settlement (BIS) capital adequacy ratio (CAR) framework stipulates that the CAR of banks has to be much higher than 2.
Risk-based capital (RBC) for local insurers will face more rigorous standards. According to Tseng, insurers with RBC ratio lower than 100 percent will be closely monitored by the government and taken over by the authorities once the RBC ration drops below 50 percent.
According to Tseng, the move is designed to accelerate Taiwan's ascension to a major financial service hub in the Asia Pacific region, offering consumers a wide array of services that spans beyond the boundaries of the domestic market.
OIU Added to Overseas Banking
Tseng added that the OIU arrangement is poised to be a vital addition to the offshore banking unit (OBU), and offshore securities unit (OSU) schemes that aids domestic financial institutions in expanding towards markets abroad.