COVID-19 is having widespread consequences for the global economy. Yet despite these setbacks, China’s insurance market is expected to continue growing, albeit at a slower rate – in part due to timely decisions from Chinese officials and insurance companies.
The Chinese insurance industry is expected to generate ¥4,467.06bn ($629.8bn) in gross written premiums (GWP) in 2020 according to GlobalData forecasts. This forecast was revised down from an initial estimate of ¥4,754.22bn ($670.29bn) before COVID-19, representing a decline of 6.0%. The Chinese insurance market is now expected to record a compound annual growth rate of 6.1% between 2019-end and 2023, whereas previously this figure was forecast at 10.4%.
With the first cases of the virus occurring in China, the country is furthest along the timeline of the pandemic compared to other countries. It is therefore a good indicator of what is yet to come for others. Some of the initiatives implemented by the country’s insurance industry have helped insulate it from the economic impact of the virus, and provide a framework for other countries to follow.
One initiative undertaken by the China Banking Regulatory Commission is the ability to fast-track the approval and launch of low-priced life insurance products. These products cover treatment for COVID-19 and are 15–30% cheaper than traditional products. One of China’s leading life insurers, Ping An, has been involved despite seeing a decline in business. Its online health consultation service saw a tenfold increase in new registrations. This trend is quite common, with online health services becoming extremely popular during the pandemic, and some insurers are offering these services for free.
China’s southern province of Hainan also launched an insurance product in February 2020 to cover losses incurred by businesses as a result of the pandemic. These products are 70% subsidised by the government. This is a different approach than has been seen in the West, with business interruption policies not paying out due to COVID-19 and insurers adding exclusions specific to the virus for certain policies. While Chinese government subsidisation is akin to government assistance being provided to businesses in Western countries, the direct involvement of the insurance industry in China will help improve its image.
On the other hand, insurance companies in Europe and the US have been coming under fire from politicians and the press in recent weeks.
While the steps taken by the Chinese insurance industry are not exhaustive, other countries should take note and consider some of these initiatives in order to navigate the pandemic. This will improve the lives of their customers, boost consumer sentiment towards the industry, and help maintain a stronger insurance market.
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