China

Jason Qian, IRMCert, Global Ambassador

The insurance perspective

The ultimate financial impact to the general insurance and reinsurance sectors are still to be revealed in the next couple of months, subject to actual progress of the pandemic. Claims figures probably would be the most eye-catching. Traditional catastrophes are usually natural disasters and geographically contained. Impacts of Covid-19, direct and indirect, are globally disruptive across almost all economic sectors, which is accompanied by chain of reactions and evidently lasting for quarters. Consequently, some of the players might have to switch its core concern from P/L to protecting its capital, solvency or rating, subject to is net exposure linked to Covid-19. From top line perspective, negative premium impact is expected due to shrinking economic activities though there could be growth in certain lines like cyber risk due to increase of demand. For lines which still heavily rely on face-to-face interaction, decrease of premium would be purely because of long time lockdown. Another factor people need to bear in mind is the impact to investment return as majority of the sectors have now been impacted. Loss of operational effectiveness might also have long term potential impact. Certain strategic projects may really need delivery at the right time. The very first thing to consider would be the health and safety of employees and clients - should they have to come to our site for necessary services. As time goes by mental health of employees should be considered as important as their physical condition. Operational resilience: Being able to work and collaborate remotely via multi location – more specifically for Covid-19 lockdown scenarios is at the heart of many CEOs thought processes during this period. The insurance industry must maintain certain level of continuous operations, even at the most difficult times, as the clients may just need the services the most. This would be both internal technical investment and infrastructure and reliability of the basic network/3rd party services (e.g. WebEx). Cyber/data security is another concern when remote working becomes business as usual while traditional firewall and security countermeasures might not necessarily cover all the aspects of the “new normal”. Beyond that, COOs might need to balance between caring for employees and data security as some of the business data might have to be accessed on-site purely due to security reasons. Operational efficiency would be another consideration as people at least need to get used to the new working approach/environment and get the best out of it. Effectively, and efficiently, paying out valid claims would be the key for insurance industry to support the community, in particular for those small and medium businesses hit most by the pandemic. Also, we may realise that it might not be just pure financial support that matters during the crisis – e.g. you might not be able to get the essentials even if you have sufficient funding. The insurance industry may be able to further look into the loss/impact data it can collect from clients across sectors/territories and then work with communities/governments to see what kind of mechanism beyond funding itself that can be helpful for similar challenges in the future. This could be contingency supplies jointly supported by the industry, early warning mechanism as value-added service, etc.