The world's most insured nation, Taiwan, opens up riskier business to derivatives providers

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Insurers can hedge risks tied to investment-linked policies
Rule change seeks to develop island's variable annuity market
Asian investment banks scouting for extra revenue may want to look at Taiwan. The world’s most insured nation is opening up some of its riskier business to the region’s derivatives providers.
The island’s watchdog is easing rules so insurers can use derivatives to hedge risks arising from the sale of investment-linked policies, according to a statement from the Financial Supervisory Commission. The change aims to boost local sales of variable annuities -- policies that can offer buyers returns in retirement linked to the performance of funds -- to cater for the needs of an aging population.
By tapping derivatives, Taiwan insurers could offer Asia’s investment banks a potential bite of business tied to more than $80 billion of annual premiums as the region’s lenders cut jobs and retrench in some areas. While variable annuities are already popular in U.S. and European markets, in Asia they’re most widely sold in Japan, where more recent entrants like Credit Suisse Group AG compete with incumbents like Societe Generale SA.

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