China's insurers may pay 2 billion yuan (US$290 million) in claims from the May 12 Sichuan Province earthquake, analysts say. That's less than 1 percent of their premium income in the first five months of 2008.
"Earthquake claims should be absorbable," said Standard & Poor's analyst Connie Wong in Hong Kong. The bigger concern is this year's 46-percent slump in the benchmark CSI 300 stock index, she said.
Profits at China Life Insurance Co and Ping An Insurance (Group) Co, the nation's biggest insurance companies, may decline because of the drop in equity prices, and as claims from the earthquake and the worst snowstorms in 50 years during January continue to mount.
Wu Dingfu, chairman of China's insurance regulator, said last month that insurers must "become more vigilant than ever about controlling risk."
BNP Paribas SA doubled its estimate for insured claims from the earthquake to 2 billion yuan after the industry's regulator prodded companies to make "goodwill" payments that may not technically be covered under policies, said Dorris Chen, an analyst at the Paris-based bank in Shanghai. The estimate is equal to 0.4 percent of Chinese insurers' January-to-May premiums.
"There are a lot of ambiguities about what is covered and what isn't," Olive Xia, a Core Pacific Yamaichi analyst in Shanghai, told Bloomberg News.
The US$290 million in estimated claim payments is only 1.5 percent of US$20 billion of quake damage estimated by a China Insurance Regulatory Commission official.
The May 12 earthquake killed 69,185 people as of yesterday and injured 374,174, according to the Ministry of Civil Affairs.
China Life, the nation's biggest insurer, has said it may pay 230 million yuan in claims from the earthquake. The cost would equal 0.2 percent of the company's 151.5 billion yuan of premiums in January through May.
(Shanghai Daily June 27, 2008)
