KUALA LUMPUR, April 15 (Bernama) -- Earthquake-related claims for Taiwan’s commercial insurers related to this month’s seismic event are unlikely to exceed those stemming from the 2016 Meinong earthquake, given the more recent event’s greater distance from the economic centres and science parks, according to global credit rating agency AM Best.
The Best’s Commentary, “Taiwan Earthquake Claims Unlikely to Exceed 2016 Levels”, notes that the magnitude 7.2 earthquake on April 3 is not expected to add significant net claims and lead to a capital event for Taiwan’s non-life insurance industry.
AM Best senior director, analytics, Christie Lee said the non-life segment’s capitalisation was weakened from a large operating loss in 2022 due to pandemic insurance.
“The industry’s capitalisation rebounded in 2023 after capital injections from insurers’ parent companies, coupled with favourable operating results, but remained below 2021 industry capital levels by 21 per cent,” she said in a statement.
In Taiwan, residential earthquake losses are ceded to the Taiwan Residential Earthquake Insurance Fund (TREIF), hence commercial insurers mainly bear commercial and industrial losses, added the report.
Most prior major earthquakes in Taiwan resulted in claims to commercial insurers for industrial losses. More generally, significant losses for the latest event could arise from business interruption coverage.
This is due to the material role the technology and science sectors play in Taiwan’s overall economy, combined with large insured purchasing adequate insurance protection, with the vast majority of these exposures ultimately being ceded to the international reinsurance market.
-- BERNAMA
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