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Preface

The Compulsory Automobile Liability Insurance (CALI) is one of the important systems established to compensate the basic loss of the victims in traffic accidents. Many countries in the world require automobile owners, or drivers, to have automobile liability insurance, which ensures the victims could receive basic coverage for the injuries caused by traffic accidents and maintains traffic safety.

Therefore, after consulting the legislative systems of many other countries and hearing the voices of local activists, the legislative procedures of the Compulsory Automobile Liability Insurance Act (the "CALI Act") were finally completed in December 1996. The CALI Act became effective on January 1, 1998.

Introduction

Since its implementation in 1998, the CALI has been in force for more than a decade. Moreover, according to recent surveys, approximately 90% of the general public is satisfied with the CALI system. No doubt, the CALI has become an important part of Taiwan social security systems.

  1. Legislative History

    1. The CALI Act, a specially legislated law, was created to cover this insurance. It was drafted in the Department of Insurance, under the Ministry of Finance (MOF), Executive Yuan (the Cabinet). The draft of the CALI Act was submitted to and approved by the Executive Yuan, then passed to the Legislative Yuan (the Congress) for approval. After receiving the approval of the Legislative Yuan in December 1996, The CALI Act was enacted and promulgated per Presidential Order in the same year. The implementation of the CALI Act became effective on January 1, 1998. As of January 1, 1999, motorcycle owners were required to have the CALI coverage. The original competent authority under the CALI Act was the MOF. The competent authority under the CALI Act became the Financial Supervisory Commission (FSC) as of July 1, 2004. Meanwhile, the Ministry of Transportation and Communication (MOTC), the competent authority for transportation and communication, works in conjunction with the FSC on certain duties and services.
    2. Realizing how important the CALI had become in the first five years since the implementation of the CALI Act, the competent authority at that time, MOF, commissioned scholars and experts to undertake and perform a full review on the CALI Act in order to come up with an improved long-term development plan. The draft for the first amendment of the CALI Act was completed in 2003. Following approval from the Legislative Yuan, the amended CALI Act was promulgated on February 5, 2005.
  2. Main Features

    1. No-fault liability with limited amount

      When a person suffers injury, disability, or loss of life as the result of a traffic accident, within the limit of the insured amount, regardless of whether the injuring party is at fault, a claimant may promptly receive insurance benefits from an insurer or compensation from the Motor Vehicle Accident Compensation Fund (aka the "Compensation Fund").
    2. Victims' rights of claim

      In principle, a victim under general liability insurance can not directly claim insurance benefits against the insurers; the victim can only claim compensation from the insured for the losses. After the insured pays the compensation to the victim, he (or she) could claim insurance benefits from the insurers. Therefore, the CALI can help the claimant to speed up the process and eliminate the less favorable restrictions against the victims, the CALI Act stipulates that when a person suffers injury or loss of life in a traffic accident, regardless of whether the victim is at fault, a claimant may directly claim insurance benefits from an insurer or compensation from the Compensation Fund.
    3. Establishment of the Compensation Fund

      The CALI Act stipulates that "the Motor Vehicle Accident Compensation Fund" shall be organized to carry out the responsibility of compensating the victim when the vehicles are:
      1. untraced (hit and run),
      2. uninsured,
      3. unauthorized, or
      4. not required to have a CALI, such as farming tractor.
    4. Premium rate

      The premium setting, in principle, could take either personal factors or vehicular factors or both into consideration and be reviewed regularly by a professional actuarial organization. Premium rates for the CALI shall be approved by the authority and the Premium Rate Review Board.
    5. Range of coverage

      Benefits payable under the CALI are:
      1. personal injury medical expenses (upper to NT$200 thousand),
      2. disabilities (NT$40 thousand to 1.6 million), and
      3. loss of life (NT$1.6million).
    6. Penalties

      Administrative fines will impose on those who have the duty to be properly insured, but fail to do so and/or an uninsured party who is involved in an automobile accident.
  3. Establishment of a special mission unit

    To further improve the mission task force and the research & development of the CALI systems, the FSC, according to the law, commissioned the Taiwan Insurance Institute (TII) in 2005 to be in charge of the matters relevant to the CALI actuarial and statistics, law and regulations, finance and accounting, reserving, and information services and the maintenance of the CALI inquiry database.
  4. Current situation

    As of Jun. 2019, more than 19 million motor vehicles were covered by the CALI. The total number of loss of life paid out thus far by insurers has amounted to 90,669 cases; disability benefits paid out amounted to 204,983 cases, and medical benefits paid out amounted to 4,726,133 cases. The amount of total has paid (1) insurance benefits NT 255.9 billion (2) compensation NT 10.1 billion.
  5. Supervisory Framework

    The competent authority under the CALI Act is the FSC. To ensure a basic coverage for the victim in a traffic accident, the CALI also aims to maintain traffic safety and order. The CALI Act involves identifying the range of automobiles to be insured, defining automobile accidents, as well as the banning, penalizing, and handling of uninsured automobiles, which are all relevant to the work of scope of the Ministry of Transportation and Communication (MOTC) . Therefore, MOTC works in conjunction with the FSC to supervise the implementation of the CALI.

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