Newsletter
Financial Supervisory Commission Relaxed Rules for E-commerce and Cross-industry Collaboration with FinTech Businesses to Encourage Development of Innovative Insurance Products
With the rapid development of the digital economy and new technologies, the Financial Supervisory Commission ("FSC") announced the next three-year plan "Fintech Development Roadmap (2.0)" on 15 August 2023 to further expand and deepen the development of FinTech in Taiwan after the "Fintech Development Roadmap (1.0)" announced in August 2020 expired.
Against this background, consumers expect to have access to innovative and inclusive insurance products and services through the internet, and public opinion also calls for regulatory relaxation to allow broader cross-industry collaboration in order to build diversified insurance ecosystems. Therefore, the FSC amended "Directions Governing E-Commerce Conducted by Insurance Enterprises" and "Directions on Insurance Enterprise, Insurance Agent, and Insurance Broker's Cross-industry Collaboration for Promotion of Ancillary Insurance Products" (and renamed as "Directions Governing Cross-industry Collaboration for Promotion of Insurance Products") on 4 October 2023. This brings the innovative insurance products jointly developed by insurance companies and FinTech businesses into the service and product scope of e-commerce and cross-industry collaboration by insurance companies. Accordingly, in response to the digitalization trends, the FSC also announced that the "Exclusion of Application of E-Signing for Insurance Sector" ceased to apply.
A summary of the above-mentioned amendments:
A. Directions Governing E-Commerce Conducted by Insurance Enterprises ("E-Commerce Regulations")
The E-commerce Regulations set forth the rules and restrictions for insurance companies to verify the identity of the proposers, conclude insurance contracts, and provide insurance services via internet (i.e., "E-commerce"). A few amendments have been made as explained below:
1. Under the E-commerce Regulations before amendment, non-life insurance companies can only conduct E-commerce business for limited products which are not on the negative list, and the life insurance companies can only conduct E-commerce for products limited to those on the positive list. Upon the amendment, insurance companies can collaborate with FinTech businesses engaging inbig data analysis, interface design, software development, internet of thing (IOT), wireless communication, etc. to develop innovative insurance products to be provided to consumers through E-commerce. Such innovation may include the content and process innovations of insurance products or services, and the scope of innovative insurance products developed through collaboration with FinTech is not subject to the limited negative or positive lists.
Insurance companies are required to apply for trial operation for such innovative insurance products in accordance with the "Directive on the Application for Trial Operation by the Insurance Companies", and can officially launch these products via E-commerce after obtaining the FSC's approval. (Amendment to Article 7-1)
2. The amendment also removed the requirement of telephone interview for comprehensive mountaineering insurance and comprehensive watersports activities insurance sold via E-commerce considering the short coverage period of such products (Amendment to Article 15). Correspondingly, the same amendment has been made to the "Regulations Governing Insurance Agent Companies and Insurance Broker Companies Engaging in Online Insurance Business and Online Insurance Services" where insurance agents and insurance brokers are no longer required to conduct telephone interview for providing online insurance services for comprehensive mountaineering insurance and comprehensive watersports activities insurance.
3. The amendment of the E-commerce Regulations expands the list of permitted insurance services to include change of individual's risk profile, repayment of policy loan, and one-time increase of premium (non-periodic payment of premium) for interest sensitive insurances and self-pay group annuity. (Amendment to Schedule 2 and Schedule 3)
B. "Directions on Insurance Enterprise, Insurance Agent, and Insurance Broker's Cross-industry Collaboration for Promotion of Ancillary Insurance Products" ("Cross-industry Collaboration Regulations")
Cross-industry Collaboration Regulations regulate the promotion of insurance service through cross-industry collaboration of insurance enterprises, insurance agents, and insurance broker with other businesses in terms of the permitted types of insurance products, the qualification of businesses working with insurance enterprises, insurance agents and insurance brokers. Originally, only five ancillary insurance products are permitted under the cross-industry collaboration business model (i.e., selling travel insurance through online sales platform or APP of travel products; selling mobile insurance through the official website, official store, or distributor of the mobile device manufacturer; selling fire and earthquake insurance related to house mortgages through Post Office's official website or online portal; selling usage based e-scooter damage insurance, usage based e-scooter third party liability insurance, etc. through the website or APP of e-scooter companies; and selling health insurance for diabetics through the online platform or APP of diabetes management service), which is too narrow in the eyes of market players.
Since cross-industry collaboration is the foundation for establishing insurance ecosystems, the Cross-industry Collaboration Regulations have been amended alongside the amendment of E-commerce Regulations to expand the scope of cross-industry collaboration beyond ancillary insurance products to include innovative insurance products as defined under the E-commerce Regulations (Amendment to Article 4), and the name of the Cross-industry Collaboration Regulations has also been changed to "Directions Governing Cross-industry Collaboration for Promotion of Insurance Products", reflecting that the scope of cross-industry collaboration is no longer limited to ancillary insurance products.
C. Cease to Apply "Exclusion of Application of E-Signing for Insurance Sector"
Under the FSC's previous announcement of the "Exclusion of Application of E-Signing for Insurance Sector", the Electronic Signature Act shall not apply to some articles of the Insurance Act and the Compulsory Automobile Liability Insurance Act with the mind to protect consumers. However, considering the application of Electronic Signature Act may facilitate consumers to apply for claims, reduce paperwork for insurers, and also facilitate the development of innovative insurance products by insurance companies and FinTech businesses, the FSC has decided that the Electronic Signature Act shall apply universally to various insurance services so long as the electronic content can be fully displayed, retrieved for later examination, and agreed by the counterparty. Thus FSC further announced that the list of "Exclusion of Application of E-Signing for Insurance Sector" ceases to apply.