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Interpretation Letter Concerning Paragraph 2 of Article 145-1 of Insurance Act

Trisha Chang/Wei-Shun Hsu

The Financial Supervisory Commission (FSC) issued an interpretation letter for Paragraph 2 of Article 145-1 of the Insurance Act, Ref. No. Jin-Guan-Bao-Cai-Zi No. 10804932431 dated July 30, 2019. Relevant rules are as follows:
1.      Insurers, from fiscal year 2019, may discontinue setting aside Special Surplus Reserve for the purposes of assisting employee transition and protecting employee rights. However, insurers shall still appropriate a certain amount within their annual budgets for the expenses of employee transition and training to protect employee rights.
2.      Insurers, from fiscal year 2019, may reverse the same amount from Special Surplus Reserve set aside from fiscal years 2016- 2018 when paying following expenses:
(1)   Expense of transferring or relocating employees, including expenses related to transferring employees between departments or corporate groups and pension or severance payment superior to that stipulated in labor-related acts due to retirement or resignation of employees.
(2)   Expense of educational training or courses for enhancing or developing professional skills of employees due to development of FinTech and insurers' business development.
3.      Department of internal audit of insurers shall include the reversal of Special Surplus Reserve in the scope of spot check of internal audit.