Best’s Commentary: Taiwan Earthquake Claims Unlikely to Exceed Levels from Similar 2016 Event

HONG KONG--(BUSINESS WIRE)--
Earthquake-related claims for Taiwan’s commercial insurers related to this month’s seismic event are unlikely to exceed those stemming from the 2016 Meinkong earthquake, given the more recent event’s greater distance from the economic centers and science parks, according to AM Best.

The Best’s Commentary, “Taiwan Earthquake Claims Unlikely to Exceed 2016 Levels,” notes that the Magnitude 7.2 earthquake on 3 April is not expected to add significant net claims and lead to a capital event for Taiwan’s non-life insurance industry.

In Taiwan, residential earthquake losses are ceded to the Taiwan Residential Earthquake Insurance Fund (TREIF), so commercial insurers mainly bear commercial and industrial losses, according to 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 insureds purchasing adequate insurance protection, with the vast majority of these exposures ultimately being ceded to the international reinsurance market.

“The non-life segment’s capitalization was weakened from a large operating loss in 2022 due to pandemic insurance,” said Christie Lee, senior director, analytics, AM Best. “The industry’s capitalisation rebounded in 2023 after capital injections from insurers’ parent companies, coupled with favourable operating results, but remain below 2021 industry capital levels by 21%.”

Standalone credit quality and the ability to withstand major catastrophe losses vary by company, but some insurers’ overall credit fundamentals are supported by strong parental financial support as per regulations.

To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=341911.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Christie Lee
Senior Director, Analytics

+852 2827 3413

christie.lee@ambest.com

Christopher Sharkey
Associate Director, Public Relations

+1 908 882 2310

christopher.sharkey@ambest.com

Cynthia Ang
Senior Industry Research Analyst

+65 6303 5026

cynthia.ang@ambest.com

Source: AM Best