Taiwan’s 20% insurance penetration ratio is one of the world’s highest – but Taiwanese remain underprotected, according to a recent study by the American Chamber of Commerce in Taipei.

Figures from the group’s latest whitepaper show that about NT$1 billion of new sales premiums flow into the country’s life insurance sector each year, but Taiwanese are purchasing only NT$2 billion of protection.

“Other developed markets are achieving rates of protection at least four times higher,” the report said. “Although the protection gap can be measured in many different ways, the fact is that the savings-oriented nature of insurance in Taiwan masks the true need for further protecting Taiwan citizens.”

The report said many Taiwanese do purchase annuities – but in terms of lifetime income, only a very small percentage of people annuitize. This stands as a risk for an aging society like Taiwan, as the lack of guaranteed lifetime income will leave many people exposed to significant longevity risk.

The group outlined five key areas that the industry should focus on:

1. Addressing the risks of dying too soon
2. Addressing the risks of living too long
3. Addressing the risks of being underinsured throughout life
4. Actively enabling and ensuring customer experience and product innovation
5. Promoting sound asset/liability & investment management practices

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