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Insurers: Coverage awareness to increase
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Although the devastating earthquake that hit Sichuan Province will eat into insurers' profits, analysts said a blessing in disguise could emerge from it as the quake could increase awareness for insurance coverage and this could propel China's disaster insurance industry in the long run.

"Shares of listed insurers are under pressure to drop due to the earthquake spill-over effect," said Yu Bin, a SYWG Research & Consulting analyst yesterday. "However, it is a one-off effect and will not trim the long-term profitability of insurers."

Home property insurance and auto insurance exclude earthquake as exemption, meaning that insurers are not liable to pay indemnity for earthquake losses. For corporate property insurance, companies which include earthquake coverage in additional terms can get indemnity.

The quake epicenter is where life insurance coverage is low, so indemnity may be limited, said Yu.

Insurers including China Life Insurance Co, Ping An Insurance, China Pacific Insurance and Taikang Insurance opened a 24-hour hotline for claims. Taikang donated 3 million yuan, Ping An 5 million yuan and China Life 10 million yuan to the quake-hit area. Taikang and Sunshine Insurance Group each set up an indemnity fund of 5 million yuan to cover claims.

The 7.8-magnitude quake caused severe damage across a wide area of southwest China on Monday, killing more than 12,000 people.

Zhou Guang, a China International Capital Corp analyst, said the quake effect won't lead to huge indemnity on property insurance and life insurance payout would depend on the casualty figure.

"Most insurers have re-insured their policies, transferred part, or most, of the losses to re-insurers," said Zhou. "So the quake won't hit insurers so much."

(Shanghai Daily May 14, 2008)

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