Taiwan FSC Issues Five Warnings on Interest-Sensitive Insurance

Interest-sensitive policies have long been a mainstay of Taiwan’s life insurance market. Their declared interest rates vary with market rates and investment performance and are not guaranteed returns, but many policyholders have mistaken them for fixed returns, leading to numerous sales disputes. Taiwan’s Financial Supervisory Commission is therefore revising the rules governing such products to require stronger disclosures, a move affecting policyholder rights and sales practices across the life insurance industry.

The revisions require policy documents to carry warnings that declared interest rates are not fixed and are not equivalent to investment returns. Insurers must also establish a confirmation mechanism to ensure customers fully understand a product’s features before purchasing it. The requirements will be incorporated into insurers’ internal control systems. Violations may incur fines of up to NT$12 million under the Insurance Act, and the new rules are expected to take effect on January 1, 2027.