Henan floods to trigger record insurance claims of US$1.7 billion as thousands of cars, property damaged
- PICC and Ping An have together received almost 250,000 claims from clients
- A large portion of the claims could come from Zhengzhou, where a lot of property and cars have been damaged
The Henan floods are likely to see total insurance claims of as much as 11 billion yuan (US$1.7 billion), Goldman Sachs said, with one expert saying this could possibly be the largest natural catastrophe for insurers in China’s history.
A large portion of the claims could come from Zhengzhou, where a lot of property and cars have been damaged, Goldman Sachs said in a report.
“The Henan flooding may well trigger the largest insurance payment in a single natural catastrophe in China as Zhengzhou is a major city,” said Louis Tse Ming-kwong, managing director of Wealthy Securities.
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Residents of Xinxiang in China's Henan province cope with continued threat of floodwaters
The prevalence of insurance cover, which is much higher now than in the past, will be a major factor in deciding the payout, he added.
Two major insurers saw their share prices plunge after they disclosed their exposure on Monday.
PICC’s share price closed 2.4 per cent lower on Monday at HK$2.46, its lowest in four months. The Beijing-based insurance holding company owns PICC Property and Casualty, which is the largest player in the car, property and casualty segment in China, with about a third of market share.
Ping An said it would need to pay about 1 billion yuan of compensation related to the catastrophe, according a statement posted on its website. It said that it had received over 46,000 claims related to the Henan flood damages, with 97 per cent related to cars and rest for damages to property, farms and accidents. Ping An’s life insurance arm also received 39 death related claims.
Several other insurers have received insurance claims numbering in the thousands.
Both PICC and Ping An said they have speeded up the process to handle claims to help the victims to cope with the crisis.
“The insurance stocks are set to face further pressure as claims mount,” Tse said.