Insured losses from China’s Henan floods could exceed $1.25bn, says Fitch

Insured losses from China’s Henan floods could exceed $1.25bn, says Fitch

The current severe flooding in Chinas Henan province is anticipated to reduce underwriting margins for the China non-life insurance and reinsurance market in 2021, with overall losses expected to exceed US $1.25 billion, according to Fitch Ratings.At this level of insurance coverage and reinsurance industry loss, it would represent more than 0.7% of the marketplaces whole premium base, the rating firm has actually described.
As we explained recently, Henan in east-central China experienced torrential rainfall considering that July 16th, setting off devastating floods and landslides.
The equivalent of a years average rain succumbed to 3 consecutive days in Zhengzhou, the provincial capital, destructive thousands of homes and automobile in the region.
Fitch stated that the losses from this flooding event will be material for the Chinese insurance market, with automobile, residential or commercial property, mishap and farming insurance all contributing to the disaster claims.
Main insurance companies are anticipated to recover a portion of their losses from reinsurance capital, Fitch thinks, subject to their reinsurance arrangements in regards to the structure, protection limitations and exemptions.
Fitch noted that ranked non-life insurers it rates in China have a danger retention ratio that varies from 70% to 98%.
As we said last week, water damage has actually only been consisted of in basic auto insurance policies in China considering that 2020, prior to which it was an optional add-on, which Fitch thinks will drive a considerable percentage of the claims.
Fitch said, “We expect insurance coverage claims from the flooding, which has actually not abated, to surpass CNY 8 billion (~ United States $1.25 bn), or about 0.7% of Chinas total non-life direct premiums written in 2020. ”
However, in spite of the significant toll for insurance companies and reinsurers from these floods, at least in terms of industry losses in China, Fitch keeps in mind that the impacted area has extremely low insurance coverage penetration.
Non-life premiums from Henan just amounted to CNY 57.1 billion in 2020, representing about 4.8% of Chinas overall non-life market premiums and 1% of the provinces GDP, Fitch described.

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!