Taiwan's property insurance market seen slowing in 08

By Faith Hung

TAIPEI, July 14 (Reuters) - Taiwan's property insurance industry -- Asia's fourth-biggest - will shrink 2-3 percent this year as record oil prices crimp demand for auto insurance, an executive of Fubon Financial (2881.TW) said on Monday.

The industry, with total premiums of T$112.8 billion ($3.7 billion) in 2007, would continue to feel the heat until 2009, when demand for insurance is expected to pick up thanks to closer business ties between Taiwan and China.

Auto insurance is a major driver of business for property insurers.

"High oil prices and lack of new products are hitting the industry pretty hard," Steve T. H. Chen, president of Fubon's insurance group, told reporters after speaking at the International Insurance Society seminar in Taipei.

Other global players attending the event included AIG (AIG.N), HSBC (0005.HK), U.S.-based Marsh & McLennan Co. (MMC.N) and Prudential Plc (PRU.L).

The industry weakness reflected challenges facing other global markets, executives said.

"The macroeconomic challenges are high and the world market would take a year or two to come back," said Mark Tucker, Prudential's group chief executive.

Fubon's Chen said the Taiwan market should turn around next year, as people are expecting better relations with China.