'SARS won't affect insurers' ratings'
(WINNIE TSE)
07/16/2003
Insurance claims related to the SARS (severe acute respiratory syndrome) outbreak will not have an immediate effect on its ratings of Hong Kong insurance companies, Standard & Poor's (S&P) said yesterday. As the death toll has stood still for over a month, SARS-related claims on life insurance policies are not expected to show a further significant increase, the ratings agency said. For non-life insurance policies, however, S&P said there remains an uncertainty on the probable claims generated in this field, which is estimated to be quite a large amount, such as employer-liability insurance policies for health workers, and business-interruption insurance policies with clauses on epidemic coverage for hotels and cancellation cover for concerts. Consequently, the rating agency will continue to keep an eye on the effect of claims on domestic insurers, adding that the processing for non-life insurance policies may be prolonged because of the possible disputes involved. SARS, which broke out in early March, took the 298 lives out of 1,755 patients in Hong Kong. According to statistics released last Thursday by the Hong Kong Federation of Insurers on 40 local insurance companies, a total of HK$105.3 million (US$13.5 million) had been paid on 492 SARS-related claims by the end of May, including HK$93.7 million (US$12.01 million) for individual life insurance, HK$7.7 million (US$987,000) for group life insurance and HK$3.83 million (US$491,000) for medical and travel insurance. "Some HK$100 million (US$12.82 million) is not a great deal compared to a turnover of nearly HK$100 billion (US$12.82 billion) each year in the insurance industry. Moreover, the claims are not concentrated on a particular insurance company," said Steven Lau, senior executive vice-president and director of AXA General Insurance Hong Kong, who agreed with S&P's analysis. "But it is difficult to predict the amount of compensation under the employer-liability insurance policies, as the claims cannot be awarded in just a few months and it usually takes at least one to two years for processing," Lau added. (HK Edition 07/16/2003 page7)
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