Insurance companies in Hong Kong are feeling the impacts of the coronavirus outbreak with policy sales declining significantly so far in 2020, according to a recent Bloomberg report.
Insurers in the region are continuing to deal with a serious decline in new policy sales as a result of the recent protests across Hong Kong, and the subsequent lack of Chinese travellers.
But as insurers continue to address the challenges from the riots, the ongoing spread of the coronavirus has reportedly seen insurance transactions almost stop completely.
Citing a senior member of one of the region’s largest insurance groups, Bloomberg states that a team of more than 100 agents has seen sales to mainland visitors decline significantly, with only two agents actually managing to sell a policy since late January.
According to Bloomberg, for this insurer, the policies sold since late January have generated first-month premium of just US$12,880 (HK$100,000), versus roughly US$640,000 (HK$5 million) in January 2019.
“Hong Kong’s protests were nothing compared with the blow of the virus to us. This is the worst I have ever seen,” the senior member of the group told Bloomberg.
One of the main drivers of new policies for Hong Kong insurers is visitors from mainland China. In its report, Bloomberg notes that customers from China have often purchased policies sold by Hong Kong domiciled carriers, in part, because of the fact that the solutions offer an investment component and payouts in foreign currencies.
The report also highlights that regulations state that policyholders be physically present in Hong Kong before a contract can be finalised, so it’s easy to see why combined with the impacts of the riots, insurers in the region are seeing a dramatic decline in new policy sales.
“I can’t think anyone would want to risk their life, taking a train or flight, passing the border, to buy an insurance product at such a time. No one is in the mood to buy insurance, there is nothing you can do but wait for the hardest time to pass,” the senior member of the group explained to Bloomberg.
The number of confirmed cases in China and other countries continues to rise, as does the death toll from the coronavirus outbreak. As of Sunday, reports said that in China, 40,171 people were infected while 187,518 were under medical observation.
The number of lives claimed from the virus in China has now officially surpassed the 900 mark, while data from the country claims that 3,281 patients have now been cured and discharged from hospital.
Last week, analysts at Moody’s said that the ongoing coronavirus outbreak poses only a limited threat to the Chinese insurance sector, while A.M. Best highlighted the potential hit to the global reinsurance industry.
The Chief Executive Officer (CEO) of reinsurance giant Hannover Re said recently that the firm’s exposure to the virus was not significant, while others in the industry have said that it remains too early to understand the threat from the outbreak.
In a recent report, analysts at Morgan Stanley discussed the exposure of Europe’s top four reinsurers to the outbreak, and their exposure to pandemic risk in Asia more broadly.