Insurers in China were amongst the first to have to deal with the harsh realities of the coronavirus outbreak. We spoke to a number of leading insurance firms in China to get a first-hand account of what they did, when they did it – and the results they had.
By Vincent Liu Liang
As insurers around the world scramble to learn how to deal with a fast-moving pandemic, all eyes are on China to see how the leading insurers in one of the biggest markets in the world coped – to see if there are some lessons that they could learn and apply in their own home countries.
Some conclusions may seem obvious – and others less so.
PICC Health Insurance Shanghai branch general manager
“It is undeniable the impact on us has been significant. Offline channels such as group insurance, personal insurance and bancassurance still fail to operate normally. Although the current virus prevention work is financed by the government, if the pandemic lasts longer, health insurance with medical insurance as its main business will face an increase in compensation.
I think the impact will continue throughout the first quarter. We are no exception. For the same period last year, we had achieved about 60% of our whole year business target. This year, we will be under greater pressure.
However, it is very similar to the evolution of SARS. I think after this pandemic, the health insurance industry is bound to usher in a new round of growth, since health insurance will assume greater importance to the public.
Insurance companies should be aware of the lack of insurance penetration in China market, the need for insurance transformation and recognise the importance of InsurTech. We should take the initiative to accelerate the transformation of our business model.
The industry’s understanding of digital strategy must be deeper than ever. Anyone who started digital early and had a high level of online operations should have been less affected by the pandemic. Taking this epidemic as an opportunity, we will speed up working with medical institutions and increase the application of professional technical means such as intelligent review systems.”
Ping An Group chief capital markets officer James Garner
“In China, the virus prevention and control work has achieved very good results, and everything is improving. Despite the upward pressure in the short term, we expect it to be controllable. In the mid-to-long term, we expect to see a retaliatory rebound in insurance demand.
Overall, it has had a minimal impact on P&C. In the short term, new car sales have slowed down, air traffic has decreased and this has weighed on new auto insurance, flight accident insurance, and transportation insurance. However, in general, P&C faces limited impact.
It has affected life insurance in the short-term, but should lead to growth in demand in the long term. As agents are unable to meet clients, their productivity and income will markedly decrease, which will severely impact Q1 new business growth and potentially impact Q2.
In the mid-to-long-term, there is huge room for growth. We believe there will be a retaliatory rebound during the post-pandemic period and bring significant market demand for health insurance. Public awareness will also increase new insurance variety and product development and this will benefit sales.
Ping An Group has 11 technology projects and many of them achieved substantial growth during the pandemic period, such as Ping An Good Doctor, our new registrations accumulated during the period have increased tenfold.”
Mitsui Sumitomo Insurance China vice president John Zheng
“Our clients are mainly Japanese companies in China. The main types of insurance are corporate property insurance, freight insurance and liability insurance.
We proactively investigate and contact our clients and promotes renewal to make sure they are all covered. Our business volume of health insurance and business interruption insurance related to the pandemic was smaller than other sectors, and there was no much fluctuation. It is estimated that after the pandemic, the related businesses affected will rebound on a small scale.
The pandemic will have a certain impact on our company’s operations, but since insurance is a service industry and not a production industry, there is no significant impact on our performance.
As per the requirements of the China Banking and Insurance Regulatory Commission, we resumed work on 2 March. We worked out methods such as combining on-site and remote work, AB shift etc., to run various businesses smoothly on the premise of safety.
We believe that this pandemic will bring greater demand for claims to the insurance industry, and the temporary reduction in the economic scale will also affect the scale of insurance business. However society’s awareness of risk prevention will be strengthened and demand for insurance will improve. Society will further understand the role of insurance as a stabiliser.”
WeSure CEO Alan Lau
“The outbreak has greatly stimulated consumers demand for insurance products and services. During the period, WeSure added 25m new active users.
In order to repay society, WeSure provided free COVID-19 insurance for front-line medical practitioners, small merchants and WeSure users, which protected a total of 15m people and provided people with peace of mind to fight the coronavirus.
During the pandemic, internet insurance became an important channel for users to obtain insurance services. When face-to-face communication is not possible and the traditional insurance agent mechanism cannot be implemented, ‘contactless’ insurance online purchase and information acquisition become particularly important.
Unlike traditional insurance companies that iterate on a monthly or annual basis, during the pandemic period, WeSure’s product launch and iteration speed are in units of days. Rapid development and fast launching process are highly impressive. During the time, all of us were working remotely online. Involving at least 10 teams, we took only 24 hours to bring ‘Yi Hu Bao’ online, which guaranteed more than 100,000 medical practitioners on the front-line of the fight.
The rapid response of many internet insurance platforms in China greatly improved the level of protection. We expect that the impact of COVID-19 will continue for some time. Afterwards, users will expect more from insurance products, medical follow-up, rehabilitation services and health management. This is also a greater incentive for all online players to let users truly feel the value of InsurTech.”
Swiss Re group CFO John Dacey
“At the moment we don’t think coronavirus is going to have a material impact either on Swiss Re or the insurance industry. In an average year, there are between 3m and 5m cases of severe influenza worldwide. In terms of fatalities, in the normal year, somewhere between 290,000 and 650,000, people actually die of influenza and seasonal illnesses. We’re trying to get to the bottom of this, working with our Chinese primary insurance partners, but at present it’s not necessarily a major event for the insurance industry.
There will be very significant economic losses along the way. At the moment, we don’t see these as sources of significant insurance claims. On the investment side of the business, we’re taking a close look at how we continue to invest own money to be sure that we are not caught off guard by some of the specific impacts to specific companies.”
China Life spokesperson
“In addition to responding to calls from regulators, giving insurance to frontline staff and fulfilling corporate social responsibility, China Life launched a 24-hour free online consultation system with a number of third-party medical institutions, providing pandemic maps, latest information and experts’ opinions on the real-time developments to alleviate the panic of the public.Internally, China Life provides exclusive protection for all our sales staffs. The company will give CNY100,000 ($14,275) worth of care funds for staff who have been diagnosed with COVID-19 and CNY300,000 each for those who die of the infection.
The scope of the impact of the coronavirus on the entire insurance industry has been great. In terms of the development of Q1, we have tried to meet our expected targets. We have adopted a number of measures to minimise the impact. We believe we do better than the market.
We have minimised the number of times sales staff meet clients, instead using the telephone and the internet. At the same time, a paperless insurance system has been developed, making it easy for clients to insure themselves and their families without leaving home.
We shifted activities such as sales staff trainings and conferences online, so they can learn and gain sales skills at home. Assessment in the severely affected areas in Hubei were suspended and other regions can cancel or reduce relevant assessment requirements as appropriate.
The entire insurance industry is actively changing from offline to online. We strengthened our online service and promoted our app. Since 20 January, the app has provided over 13m online services to 3.3m customers. By 15 February, the app had processed 2.75m client services cases, and the online service rate during the pandemic period reached 92.44%, a year-on-year increase of 32%.
In terms of claims, from 25 January to 27 February, more than 2,000 claims staffs took 24/7 online remote shifts, handling 570,000 claims, served 390,000 people and paid CNY1.34bn in compensation.” A