[ET Net News Agency, 4 February 2020] Moody's Investors Service said in a new report
that China's insurance sector is seeing limited direct financial impact from the
coronavirus outbreak, with Hubei - the province at the epicentre of the outbreak -
accounting for 4% of domestic life and non-life insurance premiums underwritten in 2019.
"The industry's premium mix also remains dominated by savings-type products, with health
insurance accounting for 22.8% of total life premiums at the end of 2019," said Frank
Yuen, a Moody's Vice President and Senior Analyst.
While insurers could face a jump in low-severity medical claims, large claims will
likely be limited by coverage from China's public medical insurance funds, which the
central government has said will cover expenses for infected individuals and suspected
cases.
Additionally, some rated insurers have also taken out reinsurance against pandemic risk,
which should in most cases cover significant parts of their in-force book.
"The more immediate and significant impact from the coronavirus outbreak on Chinese
insurers will stem from the resultant disruption on their broader business, and from the
negative impact on investment portfolios due to lingering concerns over a potential
further slowdown in the economy," added Yuen.
Outside mainland China, travel restrictions from the mainland to Hong Kong and other
countries could choke off cross-border insurance demand, which has been a major growth
driver for several pan-Asian and Hong Kong-based insurers.
While these business flows were already affected by the fall in mainland Chinese
visitors as a result of the social unrest in Hong Kong, current events threaten to delay
any potential recovery. In the longer term, the current outbreak could raise awareness for
health insurance, and raise insurance demand in China. (KL)