China’s new Covid wave hits ‘quarantine insurance’ sellers
BEIJING — In a country where someone who inadvertently comes across a patient with Covid-19 can instantly put an entire apartment complex under lock and key for 14 days or more, Chinese insurers last year began offering what they called “quarantine insurance” – getting locked up, getting paid.
Now, as the Omicron variant of the coronavirus rapidly spreads across the country, overwhelmed insurers are disconnecting products.
On Thursday, the Public Mutual Insurance Corp. of China will become the latest insurer to close to new premium holders, following in the footsteps of ZhongAn Online Property & Casualty Insurance Co., which stopped selling quarantine insurance on Monday.
ZhongAn is an online insurer launched by Alibaba Group Holding ltd.
co-founder Jack Ma, chairman of Tencent Holdings Ltd. Pony Ma and the chairman of Ping An Insurance Group Co. Ma Mingzhe.
The disappearance of the new policies reflects how quickly new infections have swept through a country that has kept daily case counts low since the initial outbreak in Wuhan in early 2020.
The products have grown in popularity in recent months on China’s social commerce platforms, as periodic Covid outbreaks across the country – each encountering strict government-imposed restrictions on citizens’ movements – have prompted finicky residents to try untested products.
“Let the insurance company pay your salary during quarantine,” some sales pitches read. Annual premiums for some early promotional products started as low as 9.90 yuan, or about $1.50, promising daily quarantine payments of 200 yuan, or about $30.
Liu Yuanyuan, a mother of two in Beijing, jumped on the quarantine insurance offer when she first heard about it in November, selling it for an annual premium of 48 yuan and promising a payment of 200 yuan per day.
At the time, Ms Liu had heard that several apartment buildings near her home had been locked down following Covid outbreaks. For Ms. Liu, spending the equivalent of a restaurant meal on four politicians – herself, her husband and their two children – was well worth the peace of mind.
Ms Liu’s caution paid off in late February, when a positive Covid case was reported within the compound of her apartment. Ms. Liu, her family and more than 4,000 of their closest neighbors were locked down for 14 days, effective immediately.
Three days after the lockdown was lifted last week, Ms Liu submitted a government document certifying the ordeal and received 11,200 yuan ($1,760) in return.
“Having the kids home for two weeks without school was difficult, but the insurance provided some comfort,” Ms Liu said.
Although China boasted an 87% vaccination rate at the end of February, the country’s policy of keeping infections to a bare minimum means that all Covid cases, regardless of symptom severity, have been met with an uncompromising approach by health authorities.
Even “indirect close contacts”, i.e. close contacts of close contacts of confirmed patients, can be immediately quarantined for up to 14 days. A Covid case in a crowded mall or office tower can mean everyone inside isn’t allowed to leave until they’ve been tested and received their results, a requirement that for many has meant spending a night sleeping on marble floors with hundreds of strangers.
Such strict public health policies have created an opportunity for creative insurers willing to try their luck on a new business opportunity.
The pandemic has already sparked an explosion of entrepreneurial spirit among Chinese insurance companies, which have for example invented new policies protecting businesses against coronavirus-induced losses.
While US insurers will generally cover the cost of canceled trips for travelers forced into quarantine, Loretta Worters, spokeswoman for the Insurance Information Institute, a New York-based trade group, said she was not at aware of any American policy like these. offered in China.
‘The risks would be far too great,’ Ms Worters said, calling it an ‘uninsurable risk’. “They would lose a fortune.”
In Australia, which like China has long had rigid quarantine requirements, no insurer offers such products.
Now, as cases rise from Shanghai to Shenzhen, Chinese insurers are also rethinking the wisdom of these policies. Companies that once dangled ultra-low premiums to boost their business are rapidly raising prices and tightening claims requirements.
The plan that Ms. Liu bought last year is already no longer available on the market. These sales policies introduced stricter requirements for payments.
In Shanghai, a personal trainer named Shen took out a quarantine insurance policy last week, immediately after being released from a three-day home quarantine when she was identified as an indirect close contact.
Three days later, Ms Shen was quarantined again, this time for seven days, after another new case of Covid-19 was identified in her immediate vicinity. Ms Shen, who declined to give her full name, says she still does not know if her policy will cover her after reviewing the fine print of her policy. But she says buying the police has given her some psychological solace.
“It’s better than nothing,” Ms. Shen said.
Not everyone has been so optimistic about insurers’ tougher claims policies.
In recent weeks, frustrated policyholders have expressed their anger on websites such as Black Cat Complaint, a commercial dispute mediation platform operated by Chinese internet company Sina Corp. As of Tuesday, the website showed more than 1,800 complaints related to quarantine insurance, most of them. on the difficulty of earning payments.
In January, China’s banking and insurance regulator issued an urgent notice to insurers, preventing them from misleading consumers or “maliciously” overstating quarantine insurance products. The regulator has urged insurers to provide detailed explanations of how the policies work.
The last straw for insurers was not the threat of tougher regulations, but the wave of Omicron infections that suddenly subjected at least 40 million Chinese to varying degrees of travel restrictions from hard-hit regions. such as the northeast of Jilin province to the southern metropolises of Shenzhen and Shanghai.
On Wednesday, China reported more than 1,000 new locally transmitted infections for a sixth straight day, a tiny level by global standards but not seen in China for two years.
Although it is unclear when this wave of epidemics will end, the decisions of ZhongAn and Public Mutual to end their quarantine insurance policies marked an acknowledgment of what Public Mutual called “the risks uncontrollable” of the company.
Wang Junshe, a Beijing resident who was released from a two-week home quarantine earlier this month, took her last chance to buy a mutual public quarantine insurance policy on Tuesday.
“We often joke that people with medical insurance don’t get very sick,” she said. “I hope I will never be quarantined and never use this quarantine insurance.”
—Grace Zhu, Leslie Scism and Alice Uribe contributed to this article.
Write to Jonathan Cheng at [email protected]
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