In a recent report Standard and Poor's forecasts huge losses in the insurance sector due to the worldwide bird flu epidemic outbreak. S&P predicts at least 15 to 20 billion USD, or even up to 200 billion USD losses for insurers in the case of a serious global bird flu outbreak.
S&P says all the services attracting massive human flow like air traveling, hotels, entertainment and catering will be hit hard and the consequence will probably be far more severe than that of the SARS epidemic outbreak in 2003. In the mean time, however, pharmaceutical companies, non-poultry food producers and Internet equipment suppliers will benefit from the avian flu outbreak.
The extent of the risk exposure of insurers depends on how long a widespread avian flu , if there is, will be. But S&P's research has found that the avian flu is putting both property insurance and life insurance business under risk.
As avian flu spreads through various channels, a widespread avian flu outbreak will pose a great challenge to the solvency of life insurers which have to deal with claims from clients contained the disease. Meanwhile, property insurers will strain under the pressure of losses suffered by commercial and tourism sectors.
S&P warns that smaller insurers particularly will be hit hard in the case of a serious bird flu outbreak although insurance companies in developed nations offer policies covering nearly all disasters and their risks are shared by reinsurance companies.
However, Prof. Tou Guozhu from the Captial University of Economics and Trade believes that Chinese insurers would suffer less loss in the scenario of 200 billion USD losses due to the low insurance coverage in the country, especially in rural areas which are particularly vulnerable to the bird flu. But this is also a reflection of the gap between China's insurance industry and it foreign counterpart.
By People's Daily Online