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Could we benefit from using China’s ways of selling life insurance?... Insurance credit scoring questioned… And ‘unprecedented’ rainfall causes floods in Nepal…

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China sees boom in life insurance as US market declines
The Chinese life insurance market is booming; fuelled by a growing middle class. In less than a decade the sales of life cover has grown by almost a third and the younger generation consider life insurance a must-have. Those in their early thirties seem especially keen to be covered typically as they start families and acquire assets. According to figures last year from Ernst & young, the same is not true in the US where the amount spend on life cover has fallen in the last decade by around a half. Interestingly, the differences in the two markets may have a lot to do with marketing. In China talking about death has historically been taboo, but attitudes have changed, making the marketing of life insurance easier. That said, insurance agents in China are selling life products as an investment and often focus the sale on return on investment rather than protecting loved ones. Experts say that the way life insurance is sold in the US needs to change to halt the decline but highlight that as premiums have dropped, there is little value in targeting a younger demographic .

Should we be credit scoring?
While the insurance industry doesn’t use the same credit scoring methods as the banks, there is of course a similar metric in play, but some believe that should not be the case. In some states the credit-based insurance scores are banned or restricted but without the information provided by the system it would be far harder to assess risk. If everyone paid the same then premiums would have to rise, so the majority of customers would suffer. Consumer groups are opposed to insurance credit scoring; their argument is that it unfairly hits lower income groups and those who have suffered financial difficulties through no fault of their own. There are frequent campaigns to try to ban the practice universally and more states are restricting how scoring is used and what factors can be included.

Weather-related risk increases
Globally climate change is causing increases in weather-related incidents and countries are changing their risk management strategies to try to mitigate the impact. In Nepal, the district of Surkhet recently suffered its worst floods in living memory. The National Emergency Operation Center says that the two-day rainfall earlier this month has led to 33 deaths and almost 100 people still missing. Other floods occurred in other parts of Nepal and the Red Cross says the rainfall was unprecedented. The severe flooding and the speed at which the disaster happened, highlighted the weaknesses in both the early warning systems and the infrastructure; both will need to be strengthened to deal with future events. Scientists say that, in line with most of the world, weather-related incidents in Nepal will increase and that climate-change is ‘likely’ to be the cause.

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