Insurers face multiple challenges in H2
Print Edition
INSURANCE companies face multiple challenges of policy surrender, cost management and a sharp stock market downturn in the second half, Pricewaterhousecoopers said in a report yesterday.
Although year-on-year profit grew more than 50 percent in the first half of the year at all six insurance companies listed in and Hong Kong, challenges prevail, Pwc said.
For life insurers, the continuous increase in clients surrendering their policies is becoming a common concern.
The report found that the surrender ratio has been rising for the past three years and accelerated when the domestic stock market surged in the first half of the year.
Zhou Xing, Pwc china insurance leader, said the increasing surrender value and maturity payment are eroding cash flow at some insurers. They should strengthen management of assets and liabilities to ensure sustainable development.
For non-life insurers, PwCwarned that the decreasing auto insurance sales and lower prices in a deregulated market could further cut margins.
Currently, comprehensive claim and cost ratio stood at between 94.4 percent and 99.6 percent for non-life units of the listed insurers.
Zhou said premium growth in the property insurance market has been challenging.
“Its insurance premium growth slowed markedly in the first half of 2015, while market competition is increasingly fierce,” Zhou said.
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