In order to promote innovation in insurance products and meet the diversified needs of consumers, the Financial Supervisory Commission of Taiwan (hereinafter, the “FSC”) announced the policy of establishing new insurance companies. insurance in 2021 and announced that the request for the creation of neo-insurance companies will be accepted from August 1 to October 31, 2022.
To implement the above-mentioned policy, four regulations relating to the establishment and operation of neo-insurance companies have been amended, namely the Regulations for the Establishment and Administration of Insurance Businesses (hereinafter , the “Rules of Establishment”), the Rules Governing the Solicitation of Business, Policy Underwriting and Claims Adjustment of Insurance Companies (hereinafter, the “Rules on Solicitation”), the Rules governing pre-sale procedures for insurance products and the Regulations Governing Non-Life Insurance Businesses Participating in Accident and Health Insurance, which were promulgated on June 29, 2022. The regulations relating to the request for establishment, the commercial solicitation and the internal control systems and procedures of new insurance companies are presented below:
I. Field of activity:
A neo insurance company is an insurance company that sells insurance products to its customers only via the Internet or other forms of electronic transmission. a neo non-life insurance companies can only sell innovative insurance products, while a life insurance companies can only sell provident-type insurance products (article 29-1 of the establishment regulation ).
II. Minimum share capital:
A neo-property insurance company mainly operates innovative products with mainly one-year or short-term insurance contracts with funds used mainly in short periods and with a minimum contribution capital set at 1 billion NT dollars. A neo-life insurance company mainly operates protection products, taking into account factors such as tariff structure, benefit amount, uncertainties, etc., and using funds mainly in the short or medium term, with a minimum contributed capital set at NT$2 billion (article 29-3 of the establishment regulations).
III. Application qualifications and documentation:
1. Qualifications of the promoter: a group of promoters must include both a financial promoter and a professional financial technology promoter (article 29-4 of the establishment regulations).
Financial promoters: the total share subscriptions by financial institutions, as promoters and shareholders, must reach at least 40% of the share capital, and at least one insurance company or financial holding company with a subsidiary of insurance must subscribe to shares representing more than 25% of the paid-up capital.
Fintech professional promoters: must have experience in big data analysis (such as AI, machine learning, etc.), interface design, software development, internet objects, wireless communications and other activities and be able to offer a successful business model.
2. Application file:
The application for the creation of a new insurance company must be made by preparing documents such as the application for authorization of establishment, the business plan, the list of promoters, the supporting documents, etc., in accordance with to the law (article 6 of the establishment regulations). In particular, the business plan includes, given its characteristics, the system for verifying the identity of customers, the control and backup operations of the information and security system, the business continuity plan , the planning of the business model and insurance products, and the market exit plan in accordance with the law (article 29-6 of the establishment regulations).
IV. Places of operation: with the exception of the head office and the customer service center, a new insurance company cannot create other physical places of activity (article 29-1 and article 29-7 of the establishment rules).
V. Implementation of commercial solicitation and internal processing systems and procedures (article 16-1 of the Solicitation Rules):
1. Since a new insurance company uses the Internet and other related means to sell insurance products, it is not allowed to have insurance legal advisers or sell insurance products through insurance brokers or agents.
2. Since a new insurance company sells insurance products directly, there is no need to solicit business through insurance attorneys. However, a new insurance company is still required by law to establish internal systems and procedures for handling commercial solicitations, which should include and specify, as a minimum, the following: an adequate understanding of the issues concerning the applicant and the insured, the policy regarding the suitability of insurance products, the unauthorized questions in the solicitation of business, the methods of sale for the sale of various types of insurance products with value of redemption to elderly clients, issues regarding applications from elderly clients seeking to understand insurance products with reserve policy value, and other compliance issues that must be followed up as required by the competent authority.