Due to COVID-19 Spread... "Temporary Improvement Expected in Auto and Health Insurance Loss Ratios"

Korea Insurance Research Institute Report on 'Current Status of COVID-19 and Its Impact on the Insurance Industry'

[Asia Economy Reporter Ki Ha-young] It is anticipated that the loss ratios of automobile insurance and health insurance may temporarily improve due to the spread of the novel coronavirus infection (COVID-19).

According to the report "Current Status of COVID-19 and Its Impact on the Insurance Industry" recently released by the Korea Insurance Research Institute on the 7th, a temporary improvement in the loss ratios of automobile insurance and health insurance is expected due to reduced long-distance vehicle operation and decreased use of medical institutions.

In the case of life insurance, there may be short-term effects due to payments for treatment costs and death benefits, but if the fatality rate is not high, the increase in loss ratio is expected to be minimal.

The Korea Insurance Research Institute also forecasted that an increase in health insurance demand after COVID-19 could lead to a rise in premium income. According to the Chinese regulatory commission, after the SARS outbreak in 2003, China's health insurance premium income recorded 34 billion yuan, a 70% surge compared to the previous year. Life insurance companies' premium income also reached 301.1 billion yuan, marking a 32% increase year-on-year.

Due to the spread of COVID-19, losses from business interruptions are also expected for global companies. With over 2,700 deaths worldwide caused by COVID-19 and ongoing casualties, companies' workforce operations are being affected.

In fact, global companies are expected to suffer significant losses from business interruptions such as branch closures or factory shutdowns. Starbucks is anticipated to face a hit to operating profits due to the closure of about 2,000 branches, which is more than half of its stores in China, a major revenue country. Volkswagen, Toyota, Ford, Hyundai Motor Company, Nissan, and others have closed factories in China and are postponing their reopening dates.

Currently, most global companies are not subscribed to insurance products related to infectious diseases. Generally, corporate insurance does not cover infectious diseases. Although some insurance companies and Munich Re in Germany have sold insurance products related to infectious diseases, sales rates have been low.

The Korea Insurance Research Institute emphasized, "Infectious diseases, along with climate risks, cyber technology risks, and geopolitical risks, are among the major risks, so appropriate preparation by global companies is necessary."

This content was produced with the assistance of AI translation services.