CPIC’s new-business value tumbles 25% due to COVID-19

August 24, 2020.

China Pacific Insurance’s new-business value for its life business sank by almost one-quarter in the first half of 2020 with lines pressured by the coronavirus pandemic, the company revealed Sunday, as it looks to technology to help drum up business going forward.

New-business value in the first half of 2020 was CNY 11.2 billion ($1.6 billion), down 24.8% from a year prior, China’s fourth-largest insurer by net premiums written said.

The figure reflects CPIC’s new-business value margin falling two percentage points, to 37%, and its total amount of premiums paid annually dropping by more than one-fifth, to CNY 30.3 billion ($4.4 billion).

“The COVID-19 pandemic was a major disruption to the traditional operational mode of the agency channel, such as offline marketing, recruitment and basic management activity,” the company said. “To address these challenges, CPIC Life took a host of measures to promote the upgrading of the agency force, such as accelerating online operation, improving agent recruitment, enhancing agent training and increasing technological applications.”

The Shanghai-based company’s property and casualty business, meanwhile, saw a slightly improved combined ratio. That figure shrank 0.3 percentage points compared to 12 months ago to reach 98.3%, with a small drop in auto lines offsetting a slight increase in other business. 

Total gross written property and casualty premiums grew by 12.3% to hit CNY 76.7 billion ($11.1 billion).

CPIC’s overall operating income grew 6.8% in the first half compared to a year ago to reach CNY 235.5 billion ($34 billion), while net profits dropped by 12%, to CNY 14.2 billion ($2.1 billion). Gross written premiums increased 4.2% to reach CNY 216.6 billion ($31.3 billion).

China is still seeing the effects of the pandemic that was born in Wuhan, noted Kong Qingwei, chairman of the insurer’s board of directors.

“A new development pattern of ‘dual circulation’ is beginning to take shape in China, with domestic circulation at the core supplemented by international circulation,” he said. “As for China’s insurance industry, the life insurance market is still facing big challenges, while on the property and casualty insurance side, the comprehensive reform of automobile insurance is expected to be launched soon, with the severity and frequency of natural disasters in 2020 rarely seen before.”

“All these lead to increasing uncertainties in our business operation,” Qingwei concluded.

CPIC insures more than 140 million customers and employs around 108,000 people.

After advancing several digital initiatives during the first half, including for a new data center in Shanghai, the company said it plans to continue leaning more heavily on technology to drive business in the coming six months.

“In the second half of the year, we will persist in high-quality development, while striking a balance between stability of business performance and the acceleration of transformation,” Qingwei said.

Some of CPIC’s technological advancements have the potential to draw scrutiny, however.

The insurer last month became the first Chinese commercial customer of Nemesysco, using the Israeli company’s “genuine emotion detection” technology to process life insurance claims faster and better detect potential fraud.

The “Layered Voice Analysis 7” product, a type of analytical tool that has been controversial for its potential to promote racial and gender bias, is said to be able to “reveal the genuine emotional state of a person” by measuring various emotions.