China’s insurance industry helped to mitigate the damage caused by COVID-19. How will the industry evolve further in the economic recovery?
As soon as the outbreak of COVID-19 became apparent, the insurance industry in China responded swiftly and supportively. A number of insurers opened fast-track channels to provide insurance products and services to ease the impact of the pandemic, such as including COVID-19 into the insurance coverage. Seventy-four insurers introduced a variety of insurance protections for medical staff and disease-control personnel who are fighting on the pandemic frontline — with a total insurance sum of insured reaching approximately RMB9 trillion.
In the short-term, industry growth is being slowed by a variety of challenges, including traditional routes to market being closed by social distancing policies and the sudden drop in travel and tourism.
Currently, life insurance products are mainly sold through agents, bancassurance and other offline channels, with online sales lagging behind. But, after the outbreak, the provincial governments took measures, such as requiring people to quarantine, banning public gatherings and stopping people from going to workplace. These measures also impacted insurers, with the China Banking and Insurance Regulatory Commission (CBIRC) banning insurance practitioners from visiting clients in person or holding mass gatherings such as conferences, client information sessions, training workshops or road shows.
The pandemic also hit during the life industry’s high season, disrupting offline sales and affecting insurers’ first-quarter sales targets — with the cash flows of some life insurers being put under considerable pressure. Insurers will have to stop expanding their agent networks and reconsider their existing sales force in the light of ongoing business development disruptions.
At the same time, the life industry is also likely to come under increased claims pressure. On 3 February 2020, the Life Insurance Supervision Department of the CBIRC issued the “Circular on Delivering Life Insurance Services Related to Prevention and Control of the COVID-19 Outbreak.” This supports all life insurers with risk factors under acceptable levels: it cancels restrictions on waiting periods (observation period), deductible amounts, designated hospitals and other areas specific to COVID-19-infected customers in illness insurance and medical insurance products. The circular also includes COVID-19 in the coverage of accident insurance and illness insurance products.