The 20th Meeting of the Risk Assessment Expert Committee for Insurance Industry was held by CISFC online on May 28, 2020. Committee Chairman Wei Yingning and over 20 representatives from the PBOC, MOF, and CBIRC and its Beijing and Shanghai Bureaus attended the meeting. More than 80 experts and scholars from insurers, securities companies, and university institutes exchanged views on the market situation and risks faced by the insurance industry in the first quarter, and the impacts of COVID-19 on the industry and on post-pandemic industry development. Also in attendance were CISFC Vice Chairman Yi Cheng and Assistant General Manager Zhou Fuping.
Discussions focused on personal insurance, property insurance, and the use of insurance funds. Due to the pandemic, personal insurance experienced a double decline in premiums written and growth rate of original premium income, though both are recovering as the pandemic is curbed. Life insurance registered a slight drop in premium income, whereas health insurance maintained a strong growth momentum. In the short run, COVID-19 has slowed new policy sales, but has had limited effect on claims filed. In the long term, it will stimulate market demand for insurance and financial security, prompting insurers to quickly ramp up online marketing efforts and service capabilities. As COVID-19 is now essentially contained in China, offline sales activities are recovering and personal insurance is expected to rebound from its current gloomy situation.
In the property insurance segment, compared with the first quarter of 2019, original premium income rose, albeit at a significantly slower rate; industry-wide net profit fell; and premium income from auto insurance policies shrank, while that from non-auto policies increased substantially. During COVID-19, there was a sharp decline in the demand for auto insurance and some of the other conventional property insurance products, which slowed premium growth or even caused a decline. But due to the lower accident and thus claim filing rate, the overall operating results of property insurance companies remained respectable. The credit insurance segment saw slowing growth rate and rising total settlement amount.
In terms of use of insurance funds, insurers are expanding their investment portfolio and holding their asset allocation structure mostly steady, though return on investment has fallen year-on-year. The coronavirus outbreak has created major investment challenges: market volatility and equity price risk have risen significantly; economic stimulus packages have pushed down interest rates worldwide and thus heightened the risk of loss from interest rate spread. Moreover, downward pressure on the economy may create additional credit risks.
Nevertheless, not all outcomes of the pandemic are negative. During the prevention and control of COVID-19, the insurance industry was able to build a positive image and the public has developed a higher awareness for risk management. Some industries will become new growth areas for insurance, and the suspension of offline sales has stimulated management and technological innovations. All these bring additional opportunities for innovation and development for insurers.
