By Katie Baker  ____ Data and analytics company, GlobalData has revised China’s general insurance forecast in the aftermath of COVID-19 outbreak. The industry is forecast to grow by 3.8% in 2020, compared to 5.7% registered in 2019.

The latest data shows that China’s general insurance industry is forecast to grow at a compound annual growth rate (CAGR) of 5.2% during 2019-2023 against the earlier forecast of 8.6%, primarily due to the scaling down of business activities and economic uncertainty resulted from the COVID-19.
The motor insurance segment has had the most evident slowdown, accounting for two-thirds of the general insurance premium in 2019.
However, new vehicle sales declined by 16.9% between January 2020 to June 2020, compared to the same period the year prior. This is due to lockdown restrictions, therefore having an impact on sales. As a result, motor insurance premium is forecast to slow down to 1.3% in 2020.
This trend is also visible in property insurance, which accounted for 10% of general insurance premium in 2019.
Due to a suspension in economic activity in Q1 2020, sales of commercial properties fell by 5.4% in the first half of 2020 on year-on-year as per the National Bureau of Statistics.
Slowdown in residential property sales and weak global economic outlook is expected to limit property insurance growth.
To improve business activity, regulatory authorities are exploring new business options. China Banking and Insurance Regulatory Commission (CBIRC) is promoting digitization. Furthermore, regulatory body is also encouraging insurers to expand their offerings of smaller product lines such as environmental pollution liability cover to drive new premium growth.
Sangharsan Biswas, Insurance Analyst at GlobalData, commented: “Despite signs of recovery, the Chinese economy continues to grapple with sluggish business activity as new cases of infection are being reported. The recent floods will further dampen economic growth, resulting in lower premium growth for general insurers.”
“The ongoing economic uncertainty compounded by the second wave of infections and worsening global trade scenario is expected to slow down growth in China’s general insurance industry. Despite push from regulators for a faster recovery, it is expected to be a protracted one.