The Best’s Briefing, titled, “Taiwan Commercial Fire Rate Adequacy Expected to Improve,” states that commercial fire coverage accounts for 17.2%, or TWD 22.7 billion (USD 0.7 billion), of 2014 total property/casualty (P/C) gross written premium in Taiwan, and this line of business grew 3.65% year-over-year in 2014. It is the second largest line of business in Taiwan after automobile. The recent revision to reinsurance regulations in Taiwan states that all property insurance retained layer’s rate on line cannot be lower than the upper layer’s rate on line. In addition, for mega-risks’ non-proportional layers with a local primary insurer participating, at least 30% of these layers need to be quoted and ceded to foreign reinsurers with acceptable global ratings.

The commercial fire line of business is subject to natural catastrophe risks. In addition to accumulated losses from residential and normal commercial risks, mega-risks could lead to severe losses should a natural catastrophe occur. The Taiwan earthquake in February 2016 is a good example of how material losses arose from high-tech risks and their related business interruption losses.

A.M. Best views the anticipated rate adequacy improvement as a positive rating factor when analyzing the operating performance and balance sheet strength of Taiwan-rated companies. More adequate rates should strengthen each company’s earnings and overall capitalizations.

To access a copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=251287.

A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Contacts