As China is battling the coronavirus, rating agencies S&P Global and Moody’s offer differing views on the impact for China’s insurers.
China’s insurance sector is seeing a limited direct financial impact from the coronavirus outbreak with Hubei – the province at the epicenter of the outbreak – accounting for 4 percent of domestic life and non-life insurance premiums underwritten in 2019, according to Moody’s.
«The industry’s premium mix also remains dominated by savings-type products with health insurance accounting for 22.8 percent of total life premiums at the end of 2019,» wrote Frank Yuen, a Moody’s vice president and senior analyst. 
Differing Views
However, S&P Global Ratings believes that the outbreak of the novel coronavirus will weigh on Chinese insurers’ earnings and revenues in 2020, as life insurers’ efforts to focus on enhancing traditional tied agency distribution may come to a standstill given concerns over the human-to-human transmission.
Hubei, the province most affected by the coronavirus, serves as one of the top 10 markets in China, accounting for approximately 4.3 percent of the sector’s gross premiums written in 2019, wrote S&P Global Ratings credit analyst Wen Wen Chen.
«The pressure on capital could be more pronounced on smaller insurers without strong parent group support in China’s large insurance market, which is dominated by key domestic insurers,» said Chen.
Jump In Low-Severity Claims
While insurers could face a jump in low-severity medical claims, large claims will likely be limited due to coverage provided by China’s public medical insurance funds which the central government has said will cover expenses for infected individuals and suspected cases, says Yuen.
Moreover, some rated insurers have also taken out reinsurance against pandemic risk, which should in most cases cover significant parts of their in-force book.
Broader Business Impacted
Outside mainland China, travel restrictions from the mainland to Hong Kong and other Asian countries have placed a lid on cross-border insurance demand, which has been a major growth driver for several pan-Asian and Hong Kong-based insurers.
Both analysts agree that 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.

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