Special Report – … and the ‘bad’ pandemic

The pandemic may have been good for the accounts of some insurance companies, but the Monetary Authority warns of problems.

Macau Business | November 2022 | Special Report | Macau’s insurance industry

“Although the overall performance of Macau’s insurance sector has not been significantly affected by the pandemic,” states the local Monetary Authority (AMCM), noting that COVID-19 may have been good for the accounts of many local insurers, “uncertainties in the external economic environment have added twists to the growth and profitability of insurers’ investment portfolios.”

“In view of the ongoing pandemic, insurers in Macau introduced group vaccine side effect insurance or free vaccine side effect related coverage for eligible customers in 2021, following the temporary additional life coverage, special one-off cash benefit and extension of premium payment grace period for customers infected with COVID-19 in 2020,” informs the Annual Report.

“On the other hand, in order to meet different financial needs of customers, insurers introduced various innovative elements to their savings-oriented life insurance products.” According to AMCM, these included the provision of multi-currency options and currency conversion benefits, enabling customers to enjoy the stability of long-term savings plans while capturing different investment opportunities.

Benjamin Chan, Chairman of AMCM, understands that 2021 “was a fruitful year. As the COVID-19 pandemic endured, the Monetary Authority of Macau (AMCM) adhered to the Macau Special Administrative Region (MSAR) Government’s policy objectives, staying united with the financial sector to consolidate the foundation and go upstream.”

“While safeguarding financial and monetary stability, we completed a number of physical and institutional infrastructure projects in an orderly manner, implemented the anti-pandemic relief measures rolled out by the MSAR Government, supported the gradual recovery of the local economy, and further enhanced the financial sector’s contribution to economic development,” Mr San explains on his opening message.

The AMCM Chairman also says that “After experiencing severe impacts brought by the pandemic in the past two years, the global financial market has exhibited drastic volatilities while uncertainties remain in the recovery path of the world economy.”

That’s why AMCM “has prudently carried out regular supervisory tasks, continuously assessing potential risks arising from the pandemic on financial institutions and requiring institutions to conduct dynamic monitoring and prepare contingency plans.”

Among them, the Monetary Authority promises to continue “to conduct regular financial analyses and reviews of financial assets to ensure the insurers’ resilience to volatile financial markets. With an aim of guarding against a pandemic-led financial crisis, all insurers are required to perform ongoing solvency tests, while life insurers are required to conduct dynamic solvency tests and report possible major changes.”

The promise of an actuarial study

With regards to employee compensation insurance, “the MSAR Government decided in 2021 to maintain the current premiums and compensation limits for damages resulting from work-related accidents and occupational diseases,” after discussions with employers and workers represented in the Standing Committee for the Coordination of Social Affairs and considering the opinions of the Labour Affairs Bureau, the AMCM and the insurance sector.

AMCM would continue to work with the Labour Affairs Bureau to jointly conduct annual reviews on compensation limits.

To further improve future annual reviews, the AMCM has also appointed an actuarial firm to conduct an actuarial study on the employees’ compensation insurance.

Enhanced social responsibility

The COVID-19 crisis brought new challenges to individuals and firms that will “need to become more aware of the risks they face,” as “they need to reconsider their protection,” said to Macau Business the founding president of the Macau Insurance Industry Professionals Association (MIIPA), Ivan Cheung, in an interview to Macau Business in November 2020.

Back then, the pandemic crisis had a negative impact on the industry as there was a decrease in new insurance policies, due to reduced interpersonal contact.

Ivan Cheung also pointed out that the pandemic also prompted insurers to further enhance their sense of social responsibility by offering new insurance covers and establishing green channels for claims alongside new tools for conducting key processes online.

MIIPA was established in 2020 with the aim of promoting higher standards and the modernization of the city’s insurance sector and with a focus on nurturing local talents and promoting professional training of insurance professionals.

 “We are short of skilled and properly chartered insurance professionals. That’s why we need to invite people from outside,” said Ivan Cheung, who is also Fidelidade Macau’s general manager.

“Our purpose is to help develop local insurance industry experts and professionals, including accountants, auditors, actuarial analysts and senior managers.”

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