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Article 9 |
The term "insurance broker" as used in this Act means a person who, on the basis of the interests of the insured, negotiates an insurance contract or provides related services and collects a commission or remuneration.
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Article 11 |
The reserve funds set out in this Act include policy reserves, unearned premium reserves, special reserves, loss reserves, and other reserve funds as may be specified by the competent authority.
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Article 12 |
The term "competent authority" as used in this Act means the Financial Supervisory Commission, Executive Yuan. However, in the case of insurance cooperatives, the Financial Supervisory Commission, Executive Yuan is the competent authority for the business operated by the cooperatives, while the competent authority in charge of cooperatives is the competent authority for the administrative affairs of the cooperatives.
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Article 40 |
The insured of the original insurance contract has no right to claim indemnification from a reinsurer. However, this restriction does not apply where otherwise provided by the original insurance contract or the reinsurance contract.
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Article 56 |
When an insurance contract is modified or a suspended contract is reinstated, failure by the insurer to reject the modification or reinstatement within 10 days from receipt of notification shall be deemed acceptance. However, where this Act has special provisions for insurance of the person, such provisions shall govern.
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Article 116 |
Unless otherwise stipulated in the contract, when a life insurance premium is due and unpaid, and remains unpaid upon thirty days after receipt of notice of payment due, the validity of the insurance contract shall be suspended.
Notice of payment due shall be served to the most recent domicile or residence of the proposer or of the person under obligation to pay the premium. After notice of payment due has been served, the premium shall be paid at the business office of the insurer.
A suspended insurance contract as referred to in paragraph 1 shall be reinstated at zero hours on the morning of the day after the premium, the interest stipulated in the insurance contract, and other expenses are paid, provided that such payment is made within six months from the date of suspension. Where the proposer applies for reinstatement more than six months after the date of suspension, the insurer may, within five days from the date on which the proposer applies for reinstatement, require that the proposer furnish proof of insurability for the insured, and the insurer may not refuse reinstatement unless the insured's degree of risk has undergone a change that is sufficiently material as to justify refusal to insure.
Where the insurer does not require that the proposer furnish proof of insurability within the time period set out in the preceding paragraph, or it does not refuse reinstatement within 15 days from its receipt of the proof of insurability referred to in the preceding paragraph, it shall be deemed to have consented to reinstatement.
The time period for applying for reinstatement stipulated in the insurance contract may not be less than two years from the date of suspension, nor may it extend beyond the expiration date of the policy period.
The insurer has the right to terminate the contract upon expiration of the time period set forth in the preceding paragraph.
Where the premium has been paid in full for two years or more at the time the insurance contract is terminated, if there is any non-forfeiture value, the insurer shall refund the non-forfeiture value.
Where the insurance contract stipulates that the insurer shall provide premium loans, when the principal and interest of such a loan exceeds the non-forfeiture value, suspension of the contract and application for reinstatement shall be subject mutatis mutandis to the provisions of paragraph 1 to paragraph 6.
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Article 117 |
An insurer may not demand payment of premium by means of litigation.
In regard to a whole life insurance contract against death which does not include benefits conditional upon survival, or a contract in which it is stipulated that the insured amount or annuity is to be paid after a certain number of years, if premium has been paid in full for two years or more at the time of nonpayment, after expiration of the time period set out in paragraph 5 of the preceding article, the insurer may only reduce the insured amount or the annuities.
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Article 120 |
If premium has been fully paid for one year or more, the proposer may obtain loans from the insurer by using the insurance contract as collateral.
Upon receipt of a proposer's loan notification, the insurer may, within a period of one month, lend such amount as may be borrowed with the collateral.
For a loan secured by an insurance contract, by 30 days before the date on which loan principal and interest exceeds non-forfeiture value the insurer shall notify the proposer in writing to repay the loan principal and interest. If the proposer fails to make repayment by said date, the insurance contract shall be suspended from the date on which loan principal and interest exceeds non-forfeiture value.
Where the insurer does not observe the requirements of the preceding paragraph in making the notification referred to therein, if the proposer fails to make repayment within 30 days from the date on which the insurer notifies the proposer in writing to repay the loan principal and interest, the insurance contract shall be suspended from the day next following the thirtieth day.
Application for reinstatement of an insurance contract suspended under either of the preceding two paragraphs shall be subject mutatis mutandis to the provisions of Article 116, paragraphs 3 to 6.
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Article 136 |
Except with the approval of the competent authority, an insurance enterprise may only be organized as a company limited by shares or as a cooperative.
Business organizations other than insurance enterprises may not engage concurrently in the insurance business or a business similar to insurance.
Where violations of the provisions in the preceding paragraph occur, the competent authority or the authority with jurisdiction over the line of business operated by the violator will act in conjunction with the judicial police authorities to suppress the illegal activity, and the case will be referred for prosecution. In the case of a legal entity, its representatives shall be jointly and severally liable for its relevant debts.
When carrying out the tasks referred to in the preceding paragraph, the authorities may search and attach account books and documents of the violators, remove signs and other fixtures, or take other necessary actions in accordance with the law.
An insurance enterprise organized as a company limited by shares shall issue its stock publicly unless another law provides otherwise or the competent authority has granted permission.
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Article 137 |
An insurance enterprise may not commence operations unless it has received permission from the competent authority, completed establishment registration, posted bond, and secured a business license in accordance with the law.
The eligibility conditions, business scope, documentation required in order to apply for approval and other compliance matters. with respect to the conduct of personal injury insurance or health insurance business by non-life insurance enterprises in accordance with the proviso of the preceding paragraph, shall be prescribed by the competent authority.
A foreign insurance enterprise may not commence operations unless it has received permission from the competent authority, completed establishment registration, posted bond, and secured a business license in accordance with the law.
Unless otherwise provided by this Act, the provisions of this Act regarding insurance enterprises shall apply mutatis mutandis to foreign insurance enterprises.
With respect to applications by foreign insurance enterprises for establishment permits, the competent authority shall prescribe regulations governing the following matters: eligibility conditions and procedures for application; required documentation, revocation of permits, issuance of business licenses, conditions for the establishment of branch offices, any change in line(s) of business, replacement of responsible person, funds allocations; and other compliance matters.
With respect to an insurance enterprise established in accordance with another act, the provisions of this Act pertaining to insurance enterprises shall apply mutatis mutandis except as otherwise provided by the other act.
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Article 138 |
An insurance enterprise in the "non-life insurance" category shall engage in the business of non-life insurance only, an insurance enterprise in the "insurance of the person" category shall engage in the business of insurance of the person only, and the same insurance enterprise may not engage concurrently in non-life insurance and insurance of the person, provided that this restriction does not apply where a non-life insurance enterprise is approved by the competent authority to engage in personal injury insurance or health insurance.
The eligibility conditions, business scope, documentation required in order to apply for approval and other compliance matters. with respect to the conduct of personal injury insurance or health insurance business by non-life insurance enterprises in accordance with the proviso of the preceding paragraph, shall be prescribed by the competent authority.
An insurance enterprise may not engage concurrently in any business other than that prescribed by this Act. However, this restriction does not apply where the competent authority has given its approval for an insurance enterprise to engage in other businesses related to insurance.
Where an insurance enterprise conducts another business related to insurance as provided for in the preceding paragraph, the permission of the Central Bank shall first be obtained if the business involves foreign exchange business.
An insurance cooperative may not engage in any insurance business with any person who is not a member of the cooperative.
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Article 138-1 |
Non-life insurance enterprises shall underwrite residential earthquake risk, and shall do so by means of the risk spreading mechanism established by the competent authority.
The Taiwan Residential Earthquake Insurance Fund shall be established to manage the risk spreading mechanism referred to in the preceding paragraph. The portion of risk that exceeds the co-insurance underwriting assumption limit for non-life insurance enterprises shall be assumed by the Taiwan Residential Earthquake Insurance Fund, cede to domestic and/or foreign reinsurers, be assumed by the manner prescribed by the competent authority or assumed by the government.
With respect to the risk spreading mechanism under the preceding two paragraphs, the competent authority shall prescribe regulations governing the risk assumption limits, insured amounts, insurance premium rates, provision for various reserve funds, and other compliance matters.
The competent authority shall prescribe regulations governing the Taiwan Residential Earthquake Insurance Fund's articles of incorporation, business scope, funds allocations, and other administrative matters.
When the occurrence of a major earthquake results in payable claims that exceed the amount of funds accumulated in the Taiwan Residential Earthquake Insurance Fund, in order to safeguard the interests of insured the Fund may as necessary request the competent authority and the Ministry of Finance to jointly apply for Executive Yuan’s approval of collateral provided by the national treasury to obtain the necessary source of funding.
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Article 143 |
An insurance enterprise may not borrow funds from an outside party, act as guarantor for an outside party, or provide its assets as collateral for the debt of another; provided, that this restriction does not apply where any one of the following circumstances obtains with respect to the insurance enterprise and the enterprise reports to and obtains the approval of the competent authority to borrow funds from an outside party:
1. The borrowing is to meet cash flow needs arising from payment of major benefits, a large amount of policy surrenders, or a large amount of policy loans.
2. The borrowing is needed for a merger or for assumption of the in-force contracts of a troubled insurer.
3. The borrowing is done by issuing bonds with capital characteristics, for the purpose of strengthening financial structure.
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Article 143-1 |
In order to preserve the insured's basic interests and to maintain financial stability, enterprises engaged in non-life insurance and insurance of the person shall make contributions to set up separate stabilization funds as incorporated foundations.
Regulations governing the organization, administration, and other matters of the incorporated stabilization fund foundations shall be prescribed by the competent authority.
The stabilization funds shall be supported by contributions from each insurance enterprise. The contribution rate of each enterprise shall be determined by the competent authority, taking into consideration the condition of the economy, the state of development of the financial industry, and the ability of insurance enterprises to pay, and may not be lower for any given insurance enterprise than 1/1000th of gross premium income.
When the amount of funds accumulated in a stabilization fund is insufficient to safeguard the interests of insured parties and there is a likelihood of serious threat to financial stability, the fund may report to the competent authority for permission to borrow funds from the financial institutions.
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Article 143-2 |
(Deleted)
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Article 143-3 |
The stabilization funds shall handle the following matters:
1. Extend loans to insurance enterprises experiencing business difficulties.
2. A stabilization fund may provide low-interest loans or subsidies to insurance enterprises that incur loss by merging with troubled insurance enterprises or assuming their contracts.
3. When, in accordance with the provisions of Article 149, paragraph 4, an insurance enterprise is placed into receivership, ordered to suspend business and undergo rehabilitation, or ordered to dissolve, or when a receiver applies to a court for reorganization in accordance with the provisions of Article 149-2, paragraph 3, the appropriate stabilization fund shall, as necessary, advance funds on behalf of the insurance enterprise to settle claims which proposers, insured parties, and beneficiaries are entitled to make under in-force contracts, and with respect to the amount thus advanced shall succeed to and exercise the rights of claim of those proposers, insured parties, and beneficiaries against the insurance enterprise.
4. In order to safeguard the interests of insured parties and help expedite reorganization proceedings, when an insurance enterprise undergoes reorganization in accordance with the provisions of this Act, proposers, insured parties, and beneficiaries shall, unless they object in writing, be deemed to have granted consent for the stabilization fund to act as their agent in attending meetings of related parties and exercising rights related to the reorganization. The stabilization funds shall adopt procedures for actions they take when serving as agent, as well as other compliance matters, and shall file them with the competent authority for recordation.
5. Act as receiver, rehabilitator, or liquidator upon appointment by the competent authority.
6. Assume, upon approval by the competent authority, the insurance contracts of insolvent insurance companies.
7. Undertake other matters, as approved by the competent authority, to stabilize the insurance market or safeguard the interests of insured parties.
The stabilization funds shall adopt rules governing the timing, scope, and dollar amount of their drawdown of funds to handle the matters set out in subparagraphs 1 to 3 and subparagraph 7 of the preceding paragraph, and shall file them with the competent authority for approval.
Where an insurance enterprise applies to a stabilization fund in accordance with paragraph 1, subparagraph 2 for subsidization of losses incurred upon merging with a troubled insurer or assuming such an insurer's contracts, the dollar amount may not exceed the total amount of funds advanced by the stabilization fund pursuant to subparagraph 3 of the same paragraph.
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Article 143-4 |
An insurance enterprise's ratio of total adjusted net capital to risk-based capital may not be lower than 200%. Where necessary, the competent authority may adjust the ratio according to international standards.
An insurance enterprise with a ratio of total adjusted net capital to risk-based capital below the ratio set out in the preceding paragraph may not distribute earnings, and the competent authority may, according to the severity of the circumstances, adopt other necessary actions or restrictions.
With regard to total adjusted net capital and risk-based capital as referred to in the preceding two paragraphs, the competent authority shall prescribe regulations governing the following matters: their scope; the method for calculating their amounts; administration thereof; the methods for adopting necessary actions or restrictions; and other compliance matters.
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Article 144 |
With respect to the policy provisions, premiums, and other relevant content for a given type of insurance policy, the competent authority shall prescribe regulations governing the following matters, taking into account the state of development of that type of insurance: procedures to be carried out before a policy is marketed; product review; and the actions to be taken when the content of a policy is incorrect, false, or in violation of the law.
In order to ensure sound operation of its insurance business, an insurance enterprise shall employ actuaries and appoint one of them as appointed actuary, who shall be responsible for setting premium rates, certifying various reserve , and handling other matters specified by the competent authority. Regulations governing qualification requirements, items to be certified, education and training, penalties, and other compliance matters shall be prescribed by the competent authority.
Appointment of the appointed actuary shall be subject to the consent of the board of directors and shall be filed to the competent authority.
The appointed actuary shall, in accordance with the principles of impartiality and fairness, provide various certified reports to the board of directors, as well as to the competent authority. Where a report that he or she has certified has any misrepresentation, concealment, omission, or incorrect information, the competent authority may, according to the severity of the circumstances, issue a warning, suspend the actuary from providing certification for a period of up to one year, or revoke appointment.
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Article 145 |
At the end of each business year, an insurance enterprise shall calculate the reserves for each type of insurance, and shall record such reserves in special account books.
The competent authority shall prescribe regulations governing the reserving, calculation methods, and other compliance matters for the various reserves referred to in the preceding paragraph.
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Article 145-1 |
After paying all taxes, an insurance enterprise preparing to distribute earnings shall first set aside 20 percent to legal capital reserves; provided, that this requirement does not apply where legal capital reserves are already equal to the enterprise's authorized capital or authorized fund.
An insurance enterprise may additionally set aside special capital reserve in accordance with the provisions of its articles of incorporation or a resolution of a shareholders meeting or general assembly of cooperative members. The competent authority may as necessary order an insurance enterprise to set aside such reserve.
The provisions of paragraph 1 shall enter into force from the next fiscal year after the provisions of this Act amended on [DATE] take effect.
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Article 146 |
Except for savings deposits, the funds allocations of an insurance enterprise shall be limited to the following:
1. Securities.
2. Real estate.
3. Loans.
4. Allocation of funds to special projects and investments in public utilities and social welfare enterprises, with the approval of the competent authority.
5. Foreign investments.
6. Investments in insurance-related businesses.
7. Derivatives trading.
8. Other funds allocations as approved by the competent authority.
The term "funds" in the preceding paragraph includes owner's equity and various reserve funds.
The savings of paragraph 1 deposited in any single financial institution may not, unless approved by the competent authority, exceed 10 percent of the insurance enterprise's funds; provided, this restriction does not apply where the competent authority has granted approval.
"Insurance-related businesses" in paragraph 1, subparagraph 6 means the businesses of insurance, financial holding, banking, bills, trust, credit card, finance leasing, securities, futures, securities investment trust, and securities investment consulting enterprises, as well as other insurance-related businesses as recognized by the competent authority.
An insurance enterprise that engages in investment-linked insurance business or labor pension annuity insurance business shall set up a separate account to record the value of the assets in which it invests.
The competent authority shall prescribe regulations governing administration and custody of separate account, allocation of investment assets, and other compliance matters pertaining to investment-linked insurance business, which are not subject to the restrictions set forth in paragraph 1; paragraph 3; Article 146-1; Article 146-2; Article 146-4; Article 146-5; and Article 146-7.
With respect to assets for which a separate account is required under paragraph 5, if a proposer retains an insurance enterprise by means of an insurance contract to exercise discretionary allocation of the assets and those assets are allocated to the purchase of the securities defined in Article 6 of the Securities and Exchange Act, application for concurrent operation of discretionary investment services shall be made in accordance with the Securities Investment Trust and Consulting Act.
With respect to the derivatives trading of paragraph 1, subparagraph 7, the competent authority shall prescribe regulations governing the terms and conditions of such trading, the scope thereof, transaction limits, internal handling procedures, and other compliance matters.
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Article 146-1 |
The funds of an insurance enterprise may be used to purchase the following marketable securities:
1. Government bonds and treasury bills.
2. Financial bonds, negotiable certificates of deposit, banker's acceptances, and commercial promissory notes guaranteed by a financial institution, the aggregate amount of which may not exceed 35 percent of the funds of the insurance enterprise.
3. Publicly issued corporate stocks approved in accordance with the law, provided that the aggregate amount of corporate stocks in any one company may not exceed 5 percent of the funds of the insurance enterprise, and the aggregate amount of the stocks in any one company in which an insurance enterprise invests may not exceed 10 percent of the paid-in capital of the company issuing the stocks.
4. Publicly issued guaranteed corporate bonds or corporate bonds issued by a company rated by a rating agency at no lower than a specified rating and approved in accordance with the law, provided that the aggregate amount made by an insurance enterprise in such corporate bonds may not exceed 5 percent of the funds of the insurance enterprise, and the aggregate amount of bonds from any one company may not exceed 10 percent of the paid-in capital of the company issuing the corporate bonds.
5. Beneficial interest certificates for securities investment trust funds and mutual trust funds for which public issue has been duly approved. The aggregate amount of such investment made by an insurance enterprise may not exceed 10 percent of the funds of the insurance enterprise, and an insurance enterprise may not invest in more than 10 percent of the aggregate amount of the beneficial interest certificates issued by any fund.
6. Securitization products and other marketable securities that the competent authority has granted approval for insurance enterprises to purchase, the aggregate amount of which may not exceed 10 percent of the funds of the insurance enterprise.
The aggregate amount of the investments contemplated under subparagraphs 3 and 4 of the preceding paragraph may not exceed 35 percent of the funds of the insurance enterprise.
It is prohibited for any of the following circumstances to obtain with respect to an investment made by an insurance enterprise in accordance with paragraph 1, subparagraph 3:
1. For the insurance enterprise or a representative thereof to be a director or supervisor of the investee company.
2. For the insurance enterprise to exercise voting rights in support of a related party, or a director, supervisor, or employee of a related party, becoming a director or supervisor of the investee financial institution.
3. For a person dispatched by the insurance enterprise to be hired as a manager of the investee company.
With respect to investments by an insurance enterprise pursuant to paragraph 1, subparagraphs 3 to 6 in publicly issued securities not listed on an exchange or OTC market, or in privately placed securities, the competent authority shall prescribe regulations governing eligibility conditions, scope and type of investments, investment rules, and other compliance matters.
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Article 146-3 |
Loans made by an insurance enterprise shall be limited to the following items:
1. Loans guaranteed by a bank, or by a credit guarantee institution recognized by the competent authority.
2. Loans secured by personal property or real property.
3. Loans secured by qualified securities as defined in Article 146-1.
4. For life insurance enterprises, loans secured by life insurance policies issued by said life insurance business.
For loans made pursuant to subparagraphs 1 to 3 of the preceding paragraph, the amount loaned to each borrower may not exceed 5 percent of an insurance enterprise's funds, and the total amount of all loans shall not exceed 35 percent of an insurance enterprise's funds.
Where an insurance enterprise provides a secured loan pursuant to paragraph 1, subparagraphs 1, 2, or 3 to one of its responsible persons, employees, major shareholders, or to a person having an interested party relationship with one of its responsible persons or with an employee in charge of administering the loan, the loan shall be fully secured, and the conditions may not be better than those extended to other loanees of the same class. A loan that is equal to or more than the dollar amount specified by the competent authority shall also be approved by three-fourths of the directors present at a board of directors meeting attended by at least two-thirds of the directors. The competent authority shall prescribe regulations governing the definition of interested parties, loan limits and aggregate loan balances, and other compliance matters.
The combined total amount of (i) an insurance enterprise's investment in corporate stocks and corporate bonds of a given company in accordance with Article 146-1, paragraph 1, subparagraphs 3 and 4, and (ii) loans made in accordance with paragraph 1, subparagraph 3 that are secured by corporate stocks and corporate bonds issued by that same company, shall exceed neither 10 percent of the insurance enterprise's funds nor 10 percent of the paid-in capital of the company issuing the stocks and corporate bonds.
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Article 146-4 |
Foreign investments of insurance enterprise funds shall be limited to the following:
1. Foreign currency deposits.
2. Foreign securities.
3. Establishment of or investment in a foreign insurance company, insurance agent company, insurance broker company, or other insurance-related enterprise approved by the competent authority.
4. Such other foreign investments as may be approved by the competent authority.
The competent authority shall set limits on the aggregate dollar amount of foreign investments of insurance enterprise funds based on the state of the business of each individual insurance enterprise. At maximum, such investments may not exceed 45 percent of the funds of any individual insurance enterprise.
The competent authority shall prescribe regulations setting forth investment rules, investment limits, review procedures, and other compliance matters pertaining to foreign investments of insurance enterprise funds.
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Article 146-5 |
Application shall be made to the competent authority for approval of allocations of insurance enterprise funds to special projects and investments in public utilities and social welfare enterprises. With respect to applications for approval, the competent authority shall prescribe regulations governing required documentation, procedures, scope of and limits upon allocations and investments, and other compliance matters.
Where the funds referred to in the preceding paragraph are allocated to investment in corporate stocks, the provisions of Article 146-1, paragraph 3 shall apply mutatis mutandis. The conditions and percentages related thereto shall not be subject to the restrictions set forth in Article 146-1, paragraph 1, subparagraph 3.
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Article 146-6 |
When the owner's equity of an insurance enterprise exceeds the minimum capital or the minimum fund provided for in Article 139, it may, with the approval of the competent authority, invest in shares issued by insurance-related enterprises without being subject to Article 146-1, paragraph 1, subparagraph 3, or to paragraph 3 of that same article. The aggregate dollar amount of such investments may not exceed the owner's equity of the insurance enterprise.
Where an insurance enterprise makes an investment in accordance with the provisions of the preceding paragraph and it has a relationship of control or subordination with the investee company, the total dollar amount of the investment may not exceed 40 percent of the owner's equity of the insurance enterprise.
With respect to insurance enterprise investments in insurance-related enterprises made in accordance with the provisions of paragraph 1, the competent authority shall prescribe regulations defining the scope of relationships of control or subordination, the method of reporting investments, and other compliance matters.
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Article 146-7 |
The competent authority may limit the ability of insurance enterprises to make loans to, or engage in other transactions with, a single party, a single related party, or a single related enterprise. The competent authority shall prescribe regulations to set such limits, define the scope of "other transactions," and set out other compliance matters.
The term "a single party" in the preceding paragraph means a single natural person or a single juristic person. The scope of a "single related party" includes the principal, his/her spouse, blood relatives within two degrees of kinship, and any enterprise of which the principal himself/herself or his/her spouse is the responsible person. The scope of "a single related enterprise" shall be governed by Articles 369-1 to 369-3, Article 369-9, and Article 369-11 of the Company Act.
The competent authority may limit the ability of an insurance enterprise to engage in non-loan transactions with an interested party. The competent authority shall prescribe regulations defining the scope of interested parties and regulated transactions, procedures for the adoption of resolutions, limits on transaction size, and other compliance matters.
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Article 146-9 |
In the course of exercising shareholder rights of securities that it holds, an insurance enterprise may not do anything that would involve exchange of equity ownership or funneling of interests, nor may it prejudice the interests of a proposer, insured party, or beneficiary.
Before attending a shareholders meeting of an investee company, an insurance enterprise shall prepare an explanation of how it has evaluated and analyzed the exercise of voting rights, and after each such shareholders meeting shall submit to its board of directors a written record of the exercise of voting rights.
An insurance enterprise and any subordinate company thereof may not act as proxy solicitor for an investee company or mandate another party to act as proxy solicitor for an investee company.
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Article 147 |
The competent authority shall prescribe regulations governing the manner in which insurance enterprises cede or assume reinsurance or operate other risk spreading mechanisms, limits applying thereto, and other compliance matters.
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Article 147-1 |
An insurance enterprise that engages exclusively in reinsurance business is a professional reinsurer, and is not subject to the provisions of Article 138, paragraph 1, Article 143-1, Article 143-3, or Article 144, paragraph 1.
The competent authority shall prescribe regulations governing the business, financial, and other related management matters of the professional reinsurers referred to in the preceding paragraph.
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Article 148 |
The competent authority may, at any time, dispatch officers to inspect the business and financial conditions of an insurance enterprise, or order an insurance enterprise to report, within a prescribed limit of time, the condition of its business.
The competent authority may engage an appropriate agency or professional expert to conduct the inspection referred to in the preceding paragraph. Expenses thus incurred shall be borne by the insurance enterprise that is inspected.
In performing the tasks referred to in the preceding two paragraphs, inspectors may take any of the following actions, which the responsible person and relevant persons of the insurance enterprise may not evade, obstruct, or refuse:
1. Ordering the insurance enterprise to provide the types of documents and forms described in Article 148-1, paragraph 1, and to present evidencing documents, vouchers, books, lists, and related materials.
2. Making inquiries of the persons in charge of (and other personnel involved in) relevant business operations of the insurance enterprise.
3. Assessing the assets and liabilities of the insurance enterprise.
In performing the tasks in paragraphs 1 and 2, inspectors may, after receiving permission from the competent authority, take any of the following actions as necessary in order to investigate the facts and evidence of a case:
1. Requesting that enterprises affiliated with the insurance enterprise being inspected provide financial statements, allow inspection of their related books or documents, or permit questioning of their relevant employees.
2. Inspecting the records of other financial institutions of transactions of the insurance enterprise, its affiliates, and others whose names are suspected to have been used by it for transactions.
The scope of "affiliates" in the preceding paragraph shall be governed by Articles 369-1 to 369-3, Article 369-9, and Article 369-11 of the Company Act.
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Article 149 |
If an insurance enterprise violates laws, regulations, or its articles of incorporation, or is suspected of improper management, the competent authority may issue an official reprimand or order it to take corrective action within a specified period of time, and may, depending on the circumstances, take the following disciplinary actions:
1. Restrict the scope of its business or funds allocations.
2. Order the insurance enterprise to suspend sales of an insurance product or products or restrict its launch of new insurance products.
3. Order the insurance enterprise to increase its capital.
4. Order removal of its managers or employees from their positions.
If an insurance enterprise does not comply with the disciplinary actions of the preceding paragraph, the competent authority shall take the following disciplinary actions as circumstances merit:
1. Revoke the resolutions of statutory meetings.
2. Dismiss its directors or supervisor(s), or suspend them from their duties for a certain period of time.
3. Any other necessary disposition.
If directors or supervisors are dismissed pursuant to the provisions of preceding paragraph, subparagraph 2, the competent authority shall notify the competent authority for company (cooperative) registration to cancel the registration of the directors and supervisors.
If the business or financial conditions of an insurance enterprise deteriorate so significantly that the insurance enterprise is unable to pay its debts or perform contractual obligations, or the rights and interests of insured parties are adversely affected, the competent authority may, depending on the severity of the circumstances, take the following disciplinary actions:
1. Place the enterprise under conservatorship.
2. Place the enterprise under receivership.
3. Order the enterprise to suspend business and undergo rehabilitation.
4. Order dissolution of the insurance enterprise.
If, pursuant to the provisions of the preceding paragraph, an insurance enterprise is ordered into conservatorship, receivership, suspension of business and rehabilitation, or dissolution, the competent authority may mandate another insurance enterprise, insurance-related institution, or professional expert to serve as conservator, receiver, rehabilitator, or liquidator. Where there are matters of compensation involving a stabilization fund, the cooperation of the stabilization fund shall also be requested.
A related institution or individual mandated by the competent authority as provided for under the preceding paragraph shall not be subject to the provisions of the Government Procurement Act when handling the matters for which it was mandated.
When an insurance enterprise is placed under receivership or ordered to suspend business and undergo rehabilitation, the provisions of the Company Act pertaining to temporary managers and inspectors do not apply, and with the exception of a reorganization filed for in accordance with the provisions of this Act, any other petition for reorganization, bankruptcy, or composition shall be automatically stayed, as shall any compulsory execution proceeding.
A receiver filing for reorganization in accordance with the provisions of this Act may petition the court to hear or rule upon its petition together with any petition for reorganization filed by the insurance enterprise under receivership before it was placed under receivership. The court may as necessary question interested parties before issuing a ruling.
If an insurance enterprise has been placed under conservatorship by the competent authority pursuant to the provisions of paragraph 4, subparagraph 1, the insurance enterprise may not perform any of the following acts without the consent of the conservator:
1. Make payments or dispose of property in excess of a limit prescribed by the competent authority.
2. Enter into any contract or undertake material obligations.
3. Any other matter that would significantly affect its finances.
The relevant provisions of Article 148 shall apply mutatis mutandis to the conservator's performance of his/her duties as conservator.
The competent authority shall prescribe regulations governing the procedures for conservatorship or receivership of insurance enterprises, the duties of conservators and receivers, fee burdens, and other compliance matters.
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Article 149-2 |
During the period in which an insurance enterprise is under receivership, the competent authority may restrict its ability to write new business, modify or terminate in-force insurance contracts, provide proposers with loans secured by insurance contracts, or pay the surrender value of insurance contracts.
A receiver shall obtain prior permission from the competent authority if, in executing his or her duties, he or she intends to take any of the following actions:
1. Carry out a capital increase, or capital decrease followed by capital increase.
2. Assign operations, assets, or liabilities in whole or in part.
3. Merge with another insurance enterprise.
4. Other important matters as designated by the competent authority.
When a receiver does not assign the entire operations, assets, or liabilities of an insurance enterprise within three months after taking it into receivership, unless there is a possibility of rescue (in which case a petition for reorganization shall be filed in court), the receiver shall report to the competent authority and request that the latter carry out rehabilitation. A receiver may as necessary apply to the competent authority for an extension on the aforementioned time period.
When a court receives a petition for reorganization filed by a receiver in accordance with the provisions of this Act, it may proceed forthwith to issue a ruling within 30 days on the basis of operational and final examination reports and opinions provided by the competent authority.
When an insurance enterprise is undergoing reorganization, rights arising out of its insurance contracts shall constitute preferential claims and need not be declared as rights of creditors in reorganization.
The insurance enterprises for which a receiver may file for reorganization are not limited to companies that have publicly issued stock or corporate bonds, and except as otherwise provided in this Act, the reorganization thereof shall be subject mutatis mutandis to the provisions of the Company Act relating to reorganization.
When a receiver intends to assign operations, assets, or liabilities in whole or in part in accordance with paragraph 2, subparagraph 2, if premium rates on the in-force contracts of the insurance enterprise under receivership are significantly out of line given current conditions and the other insurance enterprise will not accept the assignment unless premium rates are increased or insured amounts are reduced, the receiver may adjust premium rates or insured amounts after approval is granted by the competent authority.
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Article 149-6 |
When an insurance enterprise is ordered by the competent authority, pursuant to the provisions of Article 149, paragraph 4, into conservatorship, receivership, suspension of business and rehabilitation, or dissolution, the competent authority may instruct the relevant authorities or institutions to prohibit the insurance enterprise, its responsible person, or any of its employees suspected of violating the law, from transferring, delivering, or otherwise encumbering property of the enterprise, and may also request by letter that immigration authorities prevent such persons from leaving the country.
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Article 149-7 |
When an insurance enterprise organized in the form of a company limited by shares takes assignment of the operations, assets, or liabilities of another insurance enterprise that is under receivership pursuant to Article 149-2, paragraph 2, subparagraph 2, the following provisions shall apply:
1. For a company limited by shares, assumption in whole of operations, assets, or liabilities shall proceed upon adoption of a resolution by a majority vote of the voting rights represented at a shareholders meeting attended by shareholders representing a majority of the total issued shares. Dissenting shareholders may not request repurchase of their shares and the requirements of Article 185 to 187 of the Company Act shall be waived.
2. Notice of the assignment of creditors' rights shall be given by public announcement, and the requirements of Article 297 of the Civil Code shall be waived.
3. Where debt is assumed, the provision of Article 301 of the Civil Code requiring acknowledgement by the creditor shall be waived.
4. Where the competent authority deems that there is a need for urgent measures and that there will be no material adverse impact on market competition, the requirement to report a business combination to the Fair Trade Commission of the Executive Yuan under Article 11, paragraph 1 of the Fair Trade Act shall be waived.
Where an insurance enterprise merges, pursuant to Article 149-2, paragraph 2, subparagraph 2, with an insurance enterprise under receivership, the provisions of subparagraphs 1 and 4 of the preceding paragraph shall apply, notice of merger or dissolution may be given by public announcement, and the requirements of Article 316, paragraph 4 of the Company Act shall be waived.
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Article 149-8 |
For rehabilitation of an insurance enterprise, the competent authority shall appoint a rehabilitator, and may dispatch personnel to supervise the rehabilitation.
The duties of the rehabilitator are as follows:
1. To wind up pending matters.
2. To collect assets and discharge liabilities.
When an insurance enterprise is ordered by the competent authority to suspend business and undergo rehabilitation, the provisions of Article 149-1 and Article 149-2, paragraphs 1 and 7 shall apply mutatis mutandis.
In performing the duties referred to in paragraph 2, the rehabilitator shall have the authority to perform all litigious and non-litigious acts on behalf of the insurance enterprise. However, approval from the competent authority shall be obtained before transfer of operations, assets, or liabilities of the insurance enterprise, or before its merger with another insurance enterprise.
When an insurance enterprise takes assignment of the operations, assets, or liabilities of, or merges with, an insurance enterprise under rehabilitation, it shall comply with the provisions of the preceding article.
A rehabilitator who petitions for provisional attachment or provisional injunction in connection with the exercise of his/her duties shall be exempt from any requirement to provide security.
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Article 149-10 |
For an insurance enterprise that has been ordered by the competent authority into suspension of business and rehabilitation, creditors' rights shall not be exercised by any third party against the insurance enterprise other than through the rehabilitation proceeding set forth in paragraph 1 of the preceding article, except for rights that have been ascertained through litigation procedures.
If the distribution of payment of creditors' rights referred to in the preceding paragraph is likely to be delayed due to litigation, the rehabilitator may set aside an amount based on the rehabilitation distribution ratio, and distribute the balance of the property to other creditors.
The following creditors' rights shall be excluded from rehabilitation:
1. Expenses incurred by creditors for personal benefit while taking part in the rehabilitation proceeding.
2. Damages and penalties owed by the insurance enterprise due to non-performance of debt obligations after the day of suspension of business.
3. Criminal fines, administrative fines, and arrears fees.
Those holding pledges, mortgages, or liens on property of the insurance enterprise prior to the day of suspension of business shall enjoy the right of exclusion with respect to such property. Creditors with the right of exclusion may exercise their creditors' rights independently of the rehabilitation proceeding, provided that for debts that remain unsettled after exercise of the right of exclusion, such creditors may file a claim in accordance with the rehabilitation proceeding.
Expenses and debts incurred by the rehabilitator in the execution of rehabilitation duties have priority over payment of creditors, and shall be reimbursed on a running basis from the property of the insurance enterprise under rehabilitation.
The limitations period for claiming payment for creditors' rights shall be interrupted from the time that a claim is filed or that rights known to the rehabilitator are included in the rehabilitation pursuant to paragraph 1 of the preceding article, and shall resume from the day the rehabilitation is completed.
Where a creditor has received payment through the rehabilitation proceeding, right of claim against the insurance enterprise for the portion of credit not fully paid up shall be deemed extinguished. After completion of rehabilitation, if distributable property is discovered, supplemental distribution shall be carried out. If there is any balance after paying those creditors who are listed in the rehabilitation proceeding, the creditors referred to in paragraph 3 shall be entitled to claim it.
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Article 149-11 |
Within fifteen days of completion of the rehabilitation, the rehabilitator shall: prepare a revenue and expense statement, a profit and loss statement, and various account books for the rehabilitation period; publicize the revenue and expense statement and the profit and loss statement in newspapers published in the area where the insurance enterprise is located, and on a website designated by the competent authority; and submit a report to the competent authority requesting that it revoke insurance the enterprise's business permit.
An insurance enterprise whose business permit is revoked as provided for in the preceding paragraph shall be deemed dissolved from the time of business suspension, and the original rehabilitation proceeding shall be deemed liquidation.
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Article 155 |
(Deleted)
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Article 160 |
(Deleted)
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Article 165-1 |
An insurance enterprise, agent, broker, or surveyor company may not engage in business until it has became a member of the association; without legitimate reason, the association may not deny an application for membership thereby or attach improper conditions to it.
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Article 165-2 |
To ensure sound operations and maintain the reputations of its members, the association shall carry out the following matters:
1. Draw up general operating bylaws, self-regulatory, and practical codes, and then provide these, to members for their compliance as the competent authority agreed to file for recordation.
2. Exercise necessary guidance for members’ running business and coordinate disputes between them.
3. Handle matters required and entrusted by the competent authority.
4. Handle other matters as necessary to develop insurance business and achieve the mission of the association.
To carry out the matters set forth in the preceding paragraph, the association may require members to provide relevant information or make explanations.
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Article 165-3 |
The competent authority shall prescribe regulations for the supervision of operational and financial affairs of the association, the contents of constitution, the required qualifications of responsible men and related persons, and other compliance matters.
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Article 165-4 |
Where a director or supervisor of the association violates laws or regulations, fails to obey the association's constitution or bylaws, abuses his or her authority, or breaches the principle of good faith, the competent authority may issue an official reprimand or order the association to dismiss the actor.
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Article 165-5 |
When necessary to ensure the soundness of insurance market or safeguard interests of the insured, the competent authority may order the association to amend its constitution, bylaws, rules, resolutions, or to provide reference materials, reports, or to perform other certain acts.
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Article 165-6 |
The association may, in accordance with its constitution, impose necessary sanctions against members or members’ representatives who violate the constitution, bylaws, self-regulatory rules, or resolutions made by the convention or the board of directors.
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Article 165-7 |
Amendments to the association's constitution, and minutes of the board of directors and of supervisors, shall be filed for recordation as the competent authority agreed.
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Article 168 |
If an insurance enterprise violates the provisions of Article 138, paragraph 1, 3, or 5, or the provisions relating to business scope in regulations prescribed by the competent authority pursuant to Article 138, paragraph 2, an administrative fine of not less than New Taiwan Dollars nine hundred thousand but not more than four million five hundred thousand shall be imposed.
If an insurance enterprise violates the provisions of Article 138-2, paragraph 2, 4, 5, or 7, or Article 138-3, paragraph 1 or 2, or the provisions relating to the amount to be provisioned for the compensation reserve fund and the manner of such provisioning as set out in regulations prescribed by the competent authority pursuant to paragraph 2 of that same article, an administrative fine of not less than New Taiwan Dollars nine hundred thousand but not more than four million five hundred thousand shall be imposed; where the circumstances are severe, the enterprise's permit to engage in insurance trust business may also be revoked.
Where an insurance enterprise violates Article 143, an administrative fine of not less than New Taiwan Dollars nine hundred thousand but not more than New Taiwan Dollars four million five hundred thousand shall be imposed.
Where any one of the following circumstances obtains with respect to the funds allocation of an insurance enterprise, an administrative fine of not less than New Taiwan Dollars nine hundred thousand but not more than New Taiwan Dollars four million five hundred thousand shall be imposed, or the enterprise shall be ordered to replace its responsible person; where the circumstances are severe, its business license may also be revoked:
1. A violation of Article 146, paragraph 1, 3, 5, or 7, or the provisions relating to administration and custody of special ledgers or the allocation of investment assets as set out in regulations prescribed by the competent authority pursuant to paragraph 6 of that same article, or a violation of provisions relating to the terms and conditions of derivatives trading by insurance enterprises, the scope thereof, transaction limits, or internal handling procedures as set out in regulations prescribed by the competent authority pursuant to paragraph 8 of that same article.
2. A violation of Article 146-1, paragraph 1, 2, or 3, or the provisions relating to eligibility conditions, scope and type of investments, and investment rules as set out in regulations prescribed by the competent authority pursuant to paragraph 4 of that same article.
3. A violation of the provisions of Article 146-2.
4. A violation of the provisions of Article 146-3, paragraph 1, 2, or 4.
5. A violation of Article 146-4, paragraph 1 or 2, or the provisions relating to investment rules or investment limits as set out in regulations prescribed by the competent authority pursuant to paragraph 3 of that same article.
6. A violation of the forepart of paragraph 1 of Article 146-5, or of the provisions relating to scope of or limits upon investments as set out in regulations prescribed by the competent authority pursuant to the latter part of that same article.
7. A violation of Article 146-6, paragraph 1 or 2, or the provisions relating to the method of reporting investments as set out in regulations prescribed by the competent authority pursuant to paragraph 3 of that same article.
8. A violation of the provisions relating to limits on loans or other transactions as set out in regulations prescribed by the competent authority pursuant to Article 146-7, paragraph 1, or of the provisions relating to procedures for the adoption of resolutions or limits on transaction size as set out in regulations prescribed by the competent authority pursuant to Article 146-7, paragraph 3.
9. A violation of the provisions of Article 146-9, paragraph 1, 2, or 3.
Where a secured loan made by an insurance enterprise under Article 146-3, paragraph 3 or Article 146-8, paragraph 1 is not fully secured or the conditions are better than those extended to other loanees of the same class, the person responsible for the act shall be sentenced to imprisonment for not more than three years or detention, and in addition may be assessed a criminal fine of not more than New Taiwan Dollars twenty million.
Where a secured loan made by an insurance enterprise under Article 146-3, paragraph 3 or Article 146-8, paragraph 1 reaches or exceeds the monetary amount prescribed by the competent authority without approval by three-quarters of the directors present at a board of directors meeting attended by at least two-thirds of the directors, or where an insurance enterprise violates the provisions relating to loan limits and aggregate loan balances as set out in regulations prescribed by the competent authority pursuant to Article 146-3, paragraph 3, the person responsible for the act shall be assessed an administrative fine of not less than New Taiwan Dollars two million but not more than New Taiwan Dollars ten million.
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Article 169 |
If an insurance enterprise violates the provisions of Article 72 of this Act by underwriting insurance in excess of the value of the subject matter insured, the portion in violation shall become void, and the offense shall also be punished by an administrative fine of not less than New Taiwan Dollars four hundred fifty thousand but not more than New Taiwan Dollars two million two hundred fifty thousand.
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Article 170 |
(Deleted)
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Article 170-1 |
Where an insurance enterprise violates the provisions relating to the manner in which insurance enterprises cede or assume reinsurance or operate other risk spreading mechanisms, or limits applying thereto, as set out in regulations prescribed by the competent authority pursuant to Article 147, an administrative fine of not less than New Taiwan Dollars nine hundred thousand but not more than four million five hundred thousand shall be imposed.
If a professional reinsurance enterprise violates the provisions relating to business scope or financial management as set out in regulations prescribed by the competent authority pursuant to Article 147-1, paragraph 2, an administrative fine of not less than New Taiwan Dollars nine hundred thousand but not more than four million five hundred thousand shall be imposed.
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Article 171-1 |
An insurance enterprise that violates the provisions of Article 148-1, paragraph 1 or 2 shall be assessed an administrative fine of not less than New Taiwan Dollars six hundred thousand but not more than New Taiwan Dollars three million.
An insurance enterprise that violates the provisions of Article 148-2, paragraph 1 by not making explanatory documents publicly available for inspection, or submitting explanatory documents that do not contain required information, or submitting explanatory documents containing misrepresentations, shall be assessed an administrative fine of not less than New Taiwan Dollars six hundred thousand but not more than New Taiwan Dollars three million.
An insurance enterprise that violates the provisions of Article 148-2, paragraph 2 by failing to report to the competent authority or to provide a public explanation within the specified time period, or by making false representations in its reports to the competent authority or public explanations, shall be assessed an administrative fine of not less than New Taiwan Dollars three hundred thousand but not more than New Taiwan Dollars one million five hundred thousand.
An insurance enterprise that violates the provisions of Article 148-3, paragraph 1 by failing to establish or enforce internal control or auditing systems shall be assessed an administrative fine of not less than New Taiwan Dollars six hundred thousand but not more than New Taiwan Dollars three million.
An insurance enterprise that violates the provisions of Article 148-3, paragraph 2 by failing to establish or enforce internal handling systems or procedures shall be assessed an administrative fine of not less than New Taiwan Dollars six hundred thousand but not more than New Taiwan Dollars three million.
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Article 175 |
Enforcement Rules to this Act shall be prescribed by the competent authority.
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Article 175-1 |
In order to further international cooperation between the competent insurance authorities of the ROC government and foreign countries, the ROC government and agencies (or institutions) authorized by it may, based on the principle of reciprocity, enter into a cooperative treaty or agreement with a foreign government or agency (institution), or with an international organization, to facilitate matters such as information exchange, technical cooperation, and investigative assistance.
Unless such action otherwise conflicts with the interests of the state or the rights of the insurance-buying public, the competent authority may, in accordance with the treaty or agreement made pursuant to the preceding paragraph, request the provision of necessary information from related authorities and agencies (institutions) in accordance with the law, and based on the principles of reciprocity and confidentiality, provide such information to the foreign government, agency (institution), or international organization which has executed the given treaty or agreement with the ROC government.
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Article 178 |
With the exception of the provisions amended and promulgated on 30 May 2006, which will enter into force from 1 July 2007, this Act shall enter into force from the date of promulgation.
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