Taipei, Sept. 18, 2008 (CENS)--Because of the poor performance of the automobile market, Taiwan`s non-life insurance industry is encountering continued decline in premium revenues as more than half of the industry`s premium revenues come from automobile insurance coverage.

The industry registered NT$31.757 billion (US$992.4 million at US$1:NT$32) in premium revenues from automobile insurance coverage in the first seven months of this year, down 4% year-on-year. Thanks to the growth in residential and accident insurance coverage, the industry posted NT$65.995 billion (US$2.06 billion) in overall premium revenues in the first seven months of this year, down only 2.8% year-on-year.

Auto sales amounted to 24,000 units in July, representing an amazing 30% decline year-on-year and hitting the lowest monthly level in 22 years. After posting a 4.34% year-on-year decline in annual premium revenues in 2006, domestic non-life insurance industry has been encountering continued shrinkage in overall premium revenues. Originally, the industry anticipated a slight growth in overall premium revenues this year. But the continued decline in auto sales will make the industry to experience decline in premium revenues this year for three consecutive years.

Shi Tsan-ming, chairman of The Non-Life Insurance Association of the Republic of China, said domestic non-life insurance industry has close ties with domestic demand. Shi has called on domestic non-life insurers to adopt three countermeasures, including enhancing overseas deployment, developing innovative insurance products and stopping selling non-profitable business lines.

To offset the impact of the doldrums in domestic market, Shi suggested domestic non-life insurance companies have to set up overseas strongholds in mainland China, Vietnam and Thailand.

In respect of developing innovative insurance products, the association said recently three non-life insurance companies, including Cathay Century Insurance Company, Fubon Insurance Co. and Taian Insurance Co., have submitted applications with the Cabinet-level Financial Supervisory Commission to offer innovative insurance products.

The association said the most aggressive firms to wipe out non-profitable business lines are AIG General Insurance (Taiwan) Co. and Mingtai Fire & Marine Insurance Co. which saw premium revenues decline by 11.5% and 6% year-on-year in July alone. Both companies said their parents overseas have supported their resolution to focus on making profits, rather than boosting premium revenues to struggle for higher rankings. Nevertheless, AIG and Mingtai posted operating losses of NT$77 million (US$2.4 million) and NT$97 million (US$3.03 million), respectively in the first quarter of this year.

(by Ben Shen)