Moody's Investors Service said in a new report on Tuesday that China's insurance sector is seeing limited direct financial impact from the coronavirus outbreak with Hubei -- the province at the epicentre of outbreak -- accounting for 4 per cent 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 per cent 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, that 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, said Yeun, the current outbreak could raise awareness for health insurance and raise insurance demand in China.