McKinsey: What insurers can learn from China’s continuing COVID-19 recovery

Executive summary :

COVID-19 presents unprecedented challenges for the global economy. China was the first country to shut down in response to the pandemic, and it was the first to reopen. Today, many industries, insurance included, are watching closely to see what happens as China progresses through recovery.

Should insurers view China as the  bellwether of recovery?  

Things are looking up

According to McKinsey consumer surveys, overall economic sentiment in China is positive. McKinsey analysis of consumer spending data shows that China is approaching pre-COVID-19 levels of spending (in aggregate), and several leading macroeconomic indicators (such as daily car traffic) suggest the economy has started to rebound.

But there remain challenges for insurance

While the broad economic view in China may be encouraging, the outlook for the insurance industry is complex—some lines fared well, while others suffered significant declines and are just now recovering.

For example, awareness of health insurance increased, translating to a 17% growth in sales from first quarter 2019 to first quarter 2020, while life (or mortality) products were down 1% over the same period. Meanwhile, demand for auto and liabilities policies slowed dramatically, affecting property and casualty lines.

Is China the industry bellwether?

As insurers outside China weather the COVID-19 crisis and prepare for a possible second wave of infections, China can serve as a preview. Specifically, the experience of insurance agents is generally a good indicator of the short- to medium-term outlook for the industry.

We surveyed 210 agents in China across all lines of insurance in late April, examining how COVID-19 has affected their sentiment and performance, their interactions with customers via distribution, their view of insurers, and their outlook for the future.

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