Financial Inspection Report Reveals 7 Deficiencies in Life Insurance; FSC: Reasons for Claim Rejections Should Be Explained
The Financial Supervisory Commission's (FSC) financial inspection report for the second half of 2025 identified seven deficiencies in the life insurance industry, including anti-money laundering, insurance product sales document management, claims processing, post-sales management, overseas investments, related party transactions, and information security. A key issue highlighted was the failure to clearly state reasons and contractual basis for rejected claims in notification letters. The FSC mandates that insurers must provide written explanations for claim rejections. Other issues included inadequate disclosure of risks for dividend-linked investment policies, insufficient control over overseas investment limits, and poor management of password changes for special privilege accounts. The FSC has instructed the industry to strengthen compliance and management systems.
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- 📰 Published: April 11, 2026 at 10:07
- 🔍 Collected: April 11, 2026 at 12:00 (1h 53m after Published)
- 🤖 AI Analyzed: April 15, 2026 at 22:00 (105h 59m after Collected)
The Financial Supervisory Commission's (FSC) financial inspection report for the second half of 2025 pointed out that the life insurance industry exhibited deficiencies in seven areas: anti-money laundering, insurance product sales document management, claims processing, post-sales management of insurance products, overseas investments, related party transactions, and information security.
The FSC noted that past deficiencies in claims processing included incorrect calculation of insurance benefits according to policy terms. This time, the main deficiency in claims processing was that for policyholders whose claim reasons did not meet the conditions stipulated in the policy terms, the rejection notice did not state the reasons for rejection and the contractual clauses on which it was based, making it difficult for policyholders to understand why their claims were denied.
Regarding improvement measures, the FSC explained that for rejected claims, insurers should follow the 'Principles for Handling Rejected or Terminated Cases by Insurance Companies' and provide policyholders with written reasons and the legal or contractual clauses on which they are based, to facilitate understanding.
In terms of policy sales document management, the financial inspection report showed deficiencies such as sales presentation slides for dividend-linked investment policies only emphasizing dividends without balanced disclosure that dividend amounts are not guaranteed and that dividends may come from principal.
The FSC stated that policy sales documents should explain product characteristics and disclose relevant risk warnings to enable customers to fully understand the product and assess their insurance needs, thereby avoiding consumer disputes.
Regarding post-sales management of insurance products, the FSC pointed out that if the actual additional expense ratio of a policy during sales was greater than the additional expense ratio at the time of product submission, no reasonable explanation or relevant improvement measures were proposed in the post-sales insurance product management team meeting.
Deficiencies were also found in the life insurance industry's overseas investments, where daily purchases of foreign corporate bonds were not controlled by the cumulative investment amount for that day, which adversely affected the accuracy of limit checks. The FSC stated that mechanisms for controlling legal limits should be established in accordance with regulations such as the 'Regulations Governing Foreign Investments by Insurance Enterprises,' and the review mechanism for legal limit checks should be strengthened.
The financial inspection also found that insurers did not promptly change passwords for accounts with special functional privileges after use. The FSC stated that the life insurance industry should strengthen the management of password changes for special privilege accounts, review the appropriateness of the highest authority and special privilege account usage in host systems, implement the principle of least privilege, and delete unnecessary network connection settings on host systems to maintain host system security. (Edited by Zhai Si-jia) 1150411
The FSC noted that past deficiencies in claims processing included incorrect calculation of insurance benefits according to policy terms. This time, the main deficiency in claims processing was that for policyholders whose claim reasons did not meet the conditions stipulated in the policy terms, the rejection notice did not state the reasons for rejection and the contractual clauses on which it was based, making it difficult for policyholders to understand why their claims were denied.
Regarding improvement measures, the FSC explained that for rejected claims, insurers should follow the 'Principles for Handling Rejected or Terminated Cases by Insurance Companies' and provide policyholders with written reasons and the legal or contractual clauses on which they are based, to facilitate understanding.
In terms of policy sales document management, the financial inspection report showed deficiencies such as sales presentation slides for dividend-linked investment policies only emphasizing dividends without balanced disclosure that dividend amounts are not guaranteed and that dividends may come from principal.
The FSC stated that policy sales documents should explain product characteristics and disclose relevant risk warnings to enable customers to fully understand the product and assess their insurance needs, thereby avoiding consumer disputes.
Regarding post-sales management of insurance products, the FSC pointed out that if the actual additional expense ratio of a policy during sales was greater than the additional expense ratio at the time of product submission, no reasonable explanation or relevant improvement measures were proposed in the post-sales insurance product management team meeting.
Deficiencies were also found in the life insurance industry's overseas investments, where daily purchases of foreign corporate bonds were not controlled by the cumulative investment amount for that day, which adversely affected the accuracy of limit checks. The FSC stated that mechanisms for controlling legal limits should be established in accordance with regulations such as the 'Regulations Governing Foreign Investments by Insurance Enterprises,' and the review mechanism for legal limit checks should be strengthened.
The financial inspection also found that insurers did not promptly change passwords for accounts with special functional privileges after use. The FSC stated that the life insurance industry should strengthen the management of password changes for special privilege accounts, review the appropriateness of the highest authority and special privilege account usage in host systems, implement the principle of least privilege, and delete unnecessary network connection settings on host systems to maintain host system security. (Edited by Zhai Si-jia) 1150411