Guide for Directors and Senior Managers of Insurance Companies | Taiwan | Asia Pacific Insurance

Does the CEO, director or senior executives of an insurance company need to be registered or licensed by the insurance regulatory authority?

Approval from the Insurance Bureau (IB) of the Financial Supervisory Commission (FSC) is required.

Is approval from the regulator required for the appointment of a director/senior management of an insurance company? Is there any distinction between persons acting in an executive capacity and persons in a non-executive capacity?

Yes. prior approval is required for the general manager (similar to the chief executive officer).

The qualification regulations require that (i) the chair of the board of directors, (ii) at least one-third of the directors and (iii) senior executives of the insurance company meet certain qualifications.

For the directors and other senior management of an insurance company, the company only needs to report to IB for recognition after such persons take up the position. There is no distinction between executive directors and non-executive directors.

Is there generally any distinction between EDs and NEDs?

There are more stringent requirements and qualifications for the general manager (similar to the CEO). Further, an insurance company is required to elect independent directors, and there are certain criteria and qualifications to be met to serve as independent directors.

Save for the above, there is no distinction between an executive director and a non-executive director.

Is approval from the regulator required for the resignation or removal of a director/senior management of an insurance company? Is there any distinction between EDs and NEDs?

No approval from the IB is required for the resignation or removal of directors/senior management of an insurance company.

Is there any nationality requirement for directors/senior management of an insurance company? If so, do any exemptions exist?

No. However, the FSC strongly recommends at least one-third of directors be Taiwan citizens or residents. The FSC also prefers a general manager (similar to the CEO) who can speak Mandarin.

Is there a minimum qualification or minimum number of years of relevant experience applicable to directors/senior management of an insurance company?

There are different minimum requirements such as education, past relevant experience (in the form of seniority and position) and performance for the following high managerial officers: (i) the general manager (similar to the CEO); (ii) the chair of the board of directors, at least one-third of the directors, deputy general manager, assistant general manager and manager; and (iii) independent directors.

Are there any other fitness and propriety requirements that apply to directors of an insurance company? What are they?

Yes. Please see Question 8.

Are there any other negative factors which will disqualify a candidate from becoming a director of an insurance company?

Yes. This includes where a candidate has no or limited legal capacity, has committed certain crimes relating to financial matters or other criminal offenses, is proven to have been involved with dishonest or improper activities, is an undischarged bankrupt or currently serves as a responsible person of the companies in the financial sector.

Is there a residency requirement for directors/senior management of an insurance company (e.g., primary residence must be in each local jurisdiction)?

Yes. Managers at each level must be residents. The IB strongly recommends that at least one-third of directors be Taiwan citizens or residents.

Does the insurance company need to evaluate its directors/senior management before appointing such persons? What certifications, if any, must the insurance company provide to the insurance regulatory authority in respect of its directors/senior management?

Yes. An insurance company must provide relevant qualifications, including education, work experience (both seniority and position) and performance record held by (i) the general manager (similar to the CEO); (ii) the chair of the board of directors, at least one-third of the directors, deputy general manager, assistant general manager and manager; and (iii) independent directors, before the IB grants its approval for the appointment.

Generally, are there any distinctions in the duties and responsibilities or the regulatory treatment for EDs and NEDs?

As the board of directors is collectively responsible for the operations of the insurance company, there is no distinction in the duties and responsibilities or the regulatory treatment for executive directors and non-executive directors. However, independent directors are subject to specific corporate governance duties and responsibilities.

Are there any overarching duties and responsibilities for directors/senior management of insurance companies arising from insurance regulations (in addition to general corporate laws)?

Directors and senior management are responsible for the operations of the insurance company, including compliance with applicable regulatory requirements under the Insurance Act. Specifically, such requirements include the compliance of insurance regulations, the limitation of secured loans, the maintenance of company assets, and the cooperative works when the insurance company is put under receivership by the Taiwan government.

Will directors/senior management be personally liable for breach of insurance regulations by the insurance company? What penalties are there, if any?

Yes. Pursuant to the Insurance Act:

If the insurance company is under inspection or put under receivership by the Taiwan government, the director and senior
management who do not comply with IB's/receiver's requirement for cooperation may face monetary penalties up to NTD 20 million and criminal responsibilities.
If an insurance company violates regulations and its assets are insufficient to pay off its debts, the chair, directors, general manager and managers responsible for such decisions shall bear unlimited joint liability to the company's creditors.

Are directors/senior management of an insurance company subject to any periodic filing/notification requirements? What are they?

No periodic filings apply to directors/senior management.

Is there a requirement on minimum number of the board of directors of an insurance company?

Yes. For a public insurance company, there should be at least five directors and for a private insurance company, three.

Are there any rules around composition of the board of directors or equivalent (e.g., independence requirement or the number of executive- or management-level directors)?

Yes. Every insurance company should have at least three independent directors.

Are there any mandatory requirements for setting up of other committees (e.g., audit, remuneration committees)? If so, briefly describe the responsibilities of these committees.

Yes. An insurance company is required to set up an audit committee (composed of three independent directors).

Are directors of an insurance company permitted to hold other passive business interests (e.g., non-executive directorships and investments/shareholdings in other corporations)? What disclosures, if any, need to be made to the relevant regulatory authorities? Are there restrictions on the number of positions board members can hold?

No.

Is there any requirement or prohibition for an insurance company to make a payment to its directors/senior management?

There are restrictions and requirements on granting loans to directors and employees (including senior management) or entering into other transactions with them under the Insurance Act and certain regulations promulgated by the IB.

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