Weathering the pandemic

The city’s insurance sector was impacted by the COVID-19-induced crisis, namely the life segment. 

The insurance industry had to weather the storm brought by the pandemic in 2020. 

For seven out of the 12 insurance companies operating in Macau’s life segment, last year was not kind as they reported losses., with AIA sinking to a 3.7 billion loss. 

In the general insurance business (non-life), the picture was rosier, with only three companies closing last year’s accounts in the red, which allowed this sector to end 2020 with a total positive balance of MOP450 million.

According to official data, released by Monetary Authority of Macau (AMCM, in the Portuguese acronym), after accounting for income from services provided and sundry income as well as deducting management expenses, the whole industry (life and non-life) recorded a loss of MOP3.7 billion in 2020, “mainly due to the maturity benefits of life insurance and the increase in mathematical reserves.”

AMCM also reports a negative underwriting result of MOP10.0 billion for the insurance sector, “significantly higher” than the loss of MOP2.6 billion in 2019.

The Covid factor

On the other hand, total gross premiums of the insurance industry increased by 1.9 per cent from MOP28.5 billion in 2019 to MOP29.0 billion in 2020.

Life business accounted for “a persistently high market share,” making up 90.5 per cent of total gross premiums. 

During 2020, gross premiums in the life sector rose 2.7 per cent to MOP26.3 billion, “which was mainly driven by the significant increase in gross premiums of health policies. On the other hand, “due to the pandemic’s impact on the economy, non-life gross premiums decreased by 4.5 per cent from MOP2.9 billion in 2019 to MOP2.8 billion in 2020, accounting for 9.5% of total gross premiums of the insurance industry,” AMCM explained.

“In response to the pandemic outbreak in Macau in early 2020, insurers in Macau quickly launched a number of alleviation measures.” Of which, highlights AMCM, some insurance companies offered temporary additional life protections to their customers, in which the insured would receive extra death compensation for life losses caused by the novel coronavirus. Some insurance companies also provided free diagnosis benefits where, if the insured was confirmed to be infected, a one-time special cash payment would be offered. Other transitory coverages included extra hospital cash benefits in case of hospitalisation due to illness related to the pandemic and an extension of the premium payment grace period. 

Number of employees up by 5.3 per cent

In 2020, the structure of the insurance sector did not change significantly.

There are still 25 authorised insurance companies operating in the MSAR, of which 12 were life insurers and the remaining 13 were non-life insurers. 

Apart from the seven life insurers which were authorised to conduct private pension fund management business, there were two private pension fund management companies solely engaging in such business. 

In terms of origin, 11 of the authorised insurers and the two private pension fund management companies were incorporated locally while the remaining were branches of overseas insurance companies from four countries and Hong Kong. In addition, there was also a reinsurance company (representative office) with its head-office outside the MSAR.

Even so, the number of employees working in authorised insurance companies and private pension fund management companies at end-2020 went up by 5.3 per cent year-on-year to 672.

The last company to establish itself in Macau was China Taiping, a Hong Kong-incorporated private company with historical ties to the Mainland authorities, which has been leading the local general insurance sector for many years, but intends to grow up also in the life sector.

Therefore, in 2019, it established China Taiping Life Insurance Co., Ltd (CTPL), which in 2020 had its first full activity.

CTPL has been growing (MOP500 million gross premiums), but it has not avoided negative final accounts.