Why did Taiwan develop its financial 'chaebols' from life insurance?
With life insurance as the core pillar, Taiwan has built financial “chaebols” with extensive influence across the economy.
On average, each person in Taiwan owns two life insurance policies. While not traditionally viewed as a global financial hub like Hong Kong or Singapore, Taiwan has developed one of the world’s most advanced life insurance markets.
The scale of the industry is particularly significant, with total insurance sector assets accounting for nearly 150% of GDP, among the highest ratios globally. This foundation has enabled the rise of several large financial groups in Taiwan, with life insurance serving as a central growth engine.
According to Cathay’s leadership, representing one of Taiwan’s two largest financial “chaebols,” the rapid expansion of the life insurance sector stems from multiple structural factors within Taiwan’s economy and society.
These include rapid population aging, a strong savings culture and a prolonged low-interest-rate environment, all of which have accelerated insurance demand. “Taiwanese consumers view insurance as an essential part of their financial lives,” Cathay executives noted. In the context of an aging population, insurance serves not only as health protection but also as a tool for financial allocation and long-term investment planning. Currently, the group serves nearly two-thirds of Taiwan’s population of 23 million people.
Cathay representatives also noted that insurance behavior and demand in Vietnam differ considerably from Taiwan, mainly due to differences in market maturity and demographic structure rather than fundamental attitudes toward insurance itself.
Research by Prudential indicates that Vietnam’s insurance market currently represents only around 3% of GDP, roughly equal to the average across six Southeast Asian countries and significantly below the global average of 6.7%.
Mr. Ngô Trung Dũng, Deputy Secretary General of the Insurance Association of Vietnam, commented that Vietnamese consumers tend to avoid discussions around risks and insurance purchases. As a result, awareness of insurance, particularly life insurance, remains relatively limited.
According to Cathay’s leadership, Vietnam’s insurance market is still in a developing stage and reflects the characteristics of a young population. Consumers primarily view insurance as a protection tool against risks, especially those related to health, accidents and family security, rather than as a long-term investment channel.
In addition, demand for financial solutions related to children’s education also differs between the two markets. With a large young population, many Vietnamese families place strong emphasis on education and future planning for their children, creating substantial demand for education funds and overseas study planning products.
Meanwhile, Taiwan’s declining birth rate has led to a shrinking young population. Although demand for education-related financial products still exists, the overall market size is considerably smaller than in Vietnam.
In Vietnam, Cathay has currently invested more than USD 1 billion across its two core sectors: insurance and banking. According to the group’s leadership, Vietnam remains one of Cathay’s strategic markets in Southeast Asia and will continue to receive expanded investment in the coming years.
Industry experts believe Vietnam’s insurance sector still has significant room for growth and could positively impact the broader economy. Prudential research suggests that if insurance penetration, including both life and non-life insurance, increases by 50%, Vietnam’s GDP and GDP per capita could rise by approximately 4.1% and 2.5%, respectively.