China’s Hainan province has teamed up with a consortium of insurers to try to ease the disruption for businesses hit by the country’s coronavirus epidemic.
According to the China Banking and Insurance Regulatory Commission, the Hainan government will provide China’s first insurance policy against epidemic-related losses and subsidize 70% of the premium to encourage local businesses to return to work.
The six-month plan will cover companies for up to 200 million yuan ($28.6 million) in production losses, wages paid to employees in quarantine and fees incurred due to the suspension of operations as a result of the epidemic.
“There are lingering concerns that the resumption of business operations will lead to more cases of coronavirus infection, and cause production to come to a standstill due to the quarantine policies,” the CIRC said. “The insurance will play its role of ‘social stabilizer’ and help companies to come through difficult times.”
China has grounded flights, cordoned off cities and suspended transport links over the past three weeks to slow down the spread of the virus. “Many factories are yet to re-open, disrupting supply chains in China and beyond for everyone from smartphone makers to car manufacturers,” Reuters reported.
The Hainan government and the CIRC asked the province’s three main insurers on Feb. 10 to formulate an insurance product to encourage companies to reopen for business after the extended Chinese New Year holiday.
Pacific Insurance, PICC Property and Casualty, and Ping An Property & Casualty Insurance developed the product in just two days. Each will bear one third of the policy issuing paperwork, with Pacific Insurance underwriting 21% of the amount insured.
So far 100 companies in the tourism and manufacturing sectors have taken out the insurance, according to Yicai Global.
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