Influenced by 911 attack and enduring unfavorable global economy, the economic growth in Taiwan dropped to -1.9% in 2001. According to the forecast by Directorate - General of Budget, Accounting and Statistics (DGBAS), Executive Yuan, the economy in Taiwan would gradually recover in 2002 with a positive growth of 2.6%, which was expected unlikely to reach 5% again as the performance in past decades.
Three essential elements used to support the stability of non-life insurance industry in Taiwan for decades no longer sustained and this situation had added complexities to the development of the industry. First, in the aspect of government regulation, after both entities across the Taiwan Strait joining WTO in 2002, several new regulations for financial industries in Taiwan were implemented such as three-stage tariff liberalization started from April 2002. With similar products and services offered, non-life insurers would face more fierce price competition after deregulation. This market competition might further erode insurers' reserves accumulated in decades and even impact their financial stabilities. Second, in the aspect of international reinsurance supports, after 911 attack and several major losses caused by natural perils in Taiwan, international reinsurers had became more cautious toward this market. Without sufficient reinsurance capacities, insurers had to bear much higher retention losses and thus the underwriting skills and loss prevention capabilities became very critical issues in order to protect balance sheets. Third, in the aspect of customers' behavior, due to unfavorable economic conditions, insurance needs arisen from motor/house sales as well as insurance budgets were reduced. This indicated that the designs of insurance products and services by insurers should be dynamically adjusted to the varying market environment.
In the years ahead, Taian still looked forward to the high potential of this non-life insurance market even after these changes. For the last ten years the premium incomes in Taiwan were increased significantly from NT$251 billion in 1992 to NT$819 billion in 2001. However, the premium ratio for life to non-life was even biased from 1:4 to 1:8, compared to the global average of 1:1.4. This phenomenon revealed the potentials for non-life insurance industry, especially in liability, personal accident, or personal & household coverage. Consequently, Taian had prepared to explore these opportunities and differentiated itself as the leading company in personal line of business.