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Interpretative Letter Issued for Paragraph 2 of Article 145-1 of the Insurance Act
According to Paragraph 2 of Article 145-1 of the Insurance Act, "An insurance enterprise may additionally set aside a special reserve in accordance with the provisions of its articles of incorporation or a resolution of a shareholders meeting or general assembly of cooperative members. The competent authority may as necessary order an insurance enterprise to set aside such reserve." The Financial Supervisory Commission issued the interpretative letter for Paragraph 2 of Article 145-1 of the Insurance Act, Ref. No. Jin-Guan-Bao-Cai-Zi No. 10502066461 dated 13 July 2016. The main points are as follows:
1. To respond to the financial technology trends, assist employees of the insurance enterprise in retraining or skills upgrading as well as protect the rights and benefits of employees, an insurance enterprise shall set aside a special reserve of 0.5% to 1% of annual profit after tax from the distributable earnings when distributing the earnings from fiscal year 2016 to 2018; provided, however, that the foregoing does not apply to the BankTaiwan Life Insurance Co., Ltd. owned by the Ministry of Finance.
2. The insurance enterprise may reverse the same amount in the balance of the special reserve when disbursing the following expenses pursuant to the "Transition Plan of In-Service Training and Transformation" in the following year when setting aside such special reserve as mentioned in the preceding paragraph. Besides, the internal audit department of the insurance enterprise shall include the reversal of special reserve in the internal audit coverage.
(1) Expenses for courses for developing employees' digital finance knowledge, talent or skills.
(2) Expenses for competency analytics or adaptive tests for assisting human resources transformation.
(3) Expenses relating to job transfer or placement. Retirement and resignation related expenses refer to the retirement benefits and severance payments more favorable than those provided under the labor laws.
(4) Other expenses for assisting the transformation and protecting the rights and benefits of the employees.