Impact of COVID-19 on Macau’s insurance industry limited

The COVID-19 pandemic is having a relatively limited impact on Macau’s insurance industry so far, especially when compared with other places around the world, said Ivan Cheung, president of the newly established Macau Insurance Industry Professionals Association (MIIPA). Whereas for example in Europe the industry is feeling the pinch of the losses resulting from event cancellations, as some large scale events are insured against epidemics or pandemics, in Macau the situation is less worrying, as the main potential source of loss derives from business interruption insurance coverage, which is usually provided in combination with property insurance, explained Mr Cheung at a conference on, “How COVID-19 Impact the Macau Financial Industry”, organised by MIIPA.

The COVID-19 pandemic crisis has had negative impact in the industry as there has been a decrease in new life insurance polices, due to reduced interpersonal contact, while, “delayed premium payments and client insolvencies may further add pressure”. 
On the other hand, Ivan Cheung, , who is also executive director of insurance company Fidelidade Macau, pointed to positive developments such as an enhanced sense of social responsibility of insurers, by offering new insurance covers and establishing green channels for claims alongside new tools for conducting key processes online.

Wilson Vong, executive director of the Monetary Authority of Macao, highlighted the measures employed by the Government to relieve the hardship caused by the pandemic, including the special measures aimed at the insurance industry.

These included requiring insurers to report major changes in their financial situation, to conduct dynamic solvency tests to identify risks, and exempt the intermediary license registration fee for 2020. 

Greater Bay is the way 

The way forward will imply new measures facilitating regional integration within the Guangdong-Hong Kong-Macau Greater Bay Area. Mr Vong detailed opinions collected among industry players, aimed at developing the integration of insurance services with the neighboring cities. These point to the need to enhance cross-border fund exchanges, support the development of innovative products such as cross-border medical insurance, provide convenient underwriting and claims services, improve the vehicle insurance system, and study the establishment of after-sales service centers for Macau and Hong Kong insurers. 

The GBA regional integration plan also ranked high on the remarks made by Felix Pontes, Chief Representative for Macau at the Greater Bay Area Impact Forum Foundation. The former Chairman of the Macau Institute of Financial Services made the case for Macau to push for economic diversification amid the COVID-19 crisis, and in face of the regional integration in the GBA. This could be pursued by setting up an excellent health tourism industry, establishing credit lines to central banks of African Portuguese Speaking Countries and Timoe Leste, alongside the incorporation of a credit insurance company with public funds, in order to foster the development of Macau as a financial platform.
Mr Pontes also encouraged authorities to move on with a Five-Year innovation and Technology Plan based on four key pillars: digital gaming, block chain and crypto currency technology, smart MICE (Conventions and Exhibitions), and a GBA-Lusophone counties IT hub.

Banks need to embrace financial innovation 

The CEO of Banco Nacional Ultramarino (BNU), Carlos Cid Álvares, addressed the challenges brought by the COVID-19 pandemic to the city’s banking industry. “The pandemic emphasized the need for diversification”, Mr Álvares underlined, as it resulted in a decrease of credit card transactions and changes in consumer behavior.

The banking sector realized the need to avoid over reliance on single sectors like tourism or gaming, and to minimize exposure in sectors badly affected (with lasting effects), like the airline industry or to further diversify their portfolios.

In face of these challenges, local banks will feel the need to promote financial innovation to attract more investment and businesses to Macau, as well as, “enhance and develop new digital products and services”, Carlos Cid Álvares stressed.