Taiwan is easing regulations to give life insurers flexibility to invest in artificial intelligence projects, part of an ongoing campaign by authorities to redirect a larger slice of the industry's $1 trillion asset pool back home.
The Financial Supervisory Commission will amend rules to allow life insurance companies to deploy capital directly into AI-linked investment projects, the regulator said in a statement. The move is designed to support government efforts to accelerate technology infrastructure and advance Taiwan's vision of becoming a "smart technology island."
"The change is intended to encourage insurers to support AI-related industries and advance Taiwan's vision of becoming a smart technology island, while expanding the scope of insurers' investment activities." the regulator said.
In tandem with the AI push, the FSC will lift the investment ceiling for insurers looking to back certified domestic private equity funds. Life companies will be permitted to hold up to 25% of a fund's issued shares or paid-in capital, up from the current 20% limit.
Together, the regulatory revisions aim to achieve a policy goals of utilizing the insurance sector's massive capital base for local development and retaining local wealth rather than seeing it flow to international markets.
Taiwanese life insurers currently hold more than $700 billion in overseas assets. For decades, firms have reliably loaded up on foreign fixed-income assets in search of higher yields, in part due to a persistent shortage of attractive investment vehicles on the island.
The latest reforms are part of a broader blueprint to transform Taiwan into a regional wealth management hub. Regulators are steadily pushing through overhauls to elevate the island's financial sector to the same global stature enjoyed by its semiconductor industry.
As part of this strategy, the FSC is extending its high-net-worth wealth zone pilot in the southern hub of Kaohsiung into a third year. The zone tests out premium private banking and family office operations.
It will also consider opening up new initiatives to be tried out in the wealth zone such as expanding banks' cross-border financial services to include domestic high-net-worth clients, lifting investor limits on private equity and credit funds, and allowing insurance products to establish dedicated prepaid-premium accounts.
The FSC said the details and supporting measures for these proposals will be finalized following discussions with relevant authorities and will be announced publicly as soon as possible.
