Coronavirus affecting China's economy, earnings - AM Best analysts
The coronavirus outbreak is slowing China's economy, reducing insurance sales and impacting investment income, according to AM Best Asia-Pacific analysts Christie Lee, senior director, analytics, and James Chan, senior financial analyst, speaking in a recent episode of AMBestTV.
Addressing the potential impact of the virus on China’s insurance industry, Lee said: “Overall, the earnings for the life and non-life insurance markets are expected to have profit weakening in 2020, especially in the first half due to low economic consumptions, slower new business growth and lower investment returns.
“However, the virus experience is likely going to improve the general public health risk awareness. In turn, this will benefit health insurance product sales in the long term. China is the second largest insurance market where the health insurance penetration rate is still very low. This means there is still a lot of potential in this market.”
Chan discussed the direct effect of the outbreak on health insurers, in light of the central government of China announcing that they would help to shoulder the treatment costs for infected patients.
“AM Best’s viewpoint is that the claims arising from the virus outbreak will have a relatively limited impact on Chinese insurers' underwriting profitability,” he said. “Individual policyholders are unlikely to incur a significant amount of out-of-pocket expenses by themselves or would require claims on their private health covers.”
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