The COVID-19 outbreak may cost the world’s top 100 most valuable insurance brands up to US$100 billion worth of brand value according to a new report.
Brand valuation consultancy, Brand Finance has issued its Insurance 100 2020 report, which shows that the insurance sector is one of the most heavily impacted industries globally and could face a potential 20% loss in brand value.
“COVID-19 is undoubtedly going to wreak havoc on the sector in the coming year – both financially, as brands that already operate on wafer-thin margins are being drowned in claims, and reputationally, as brands which refuse to pay out COVID-19 related claims are risking potential irreparable damage,” the report stated.
Looking beyond the insurance sector, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated US$1 trillion as a result of the Coronavirus outbreak.
Brand Finance said it had assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1 January 2020. The likely impact on brand value was estimated for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.
David Haigh, CEO of Brand Finance, commented: “The COVID-19 pandemic is going to hit the insurance sector hard – Brand Finance has predicted that insurance brands could face up to a 20% drop in brand value and undoubtedly, we are going to witness revenue slowdown for all brands across the sector. Some brands should, however, fare better in terms of their margins, including the property and casualty insurance brands, as fewer such claims are expected during the far-reaching and ongoing lockdown period.”
The report said Chinese insurance group Ping An has recorded a 20% brand value growth to $60.6 billion, extending its lead further as the world’s most valuable insurance brand.
Most notably, the brand’s foray into health technology through its Good Doctor service has propelled Ping An even further into a league of its own. With 315 million registered users and nearly 70 million monthly active users, as at the end of 2019, it has become the largest mobile medical app in China in terms of coverage. Despite COVID-19 impacting Ping An’s life insurance business, the growth in registrations for Good Doctor should offset this loss.
A further 11 Chinese insurance brands that feature in this year’s ranking. With their total brand value reaching $151.5 billion, China is home to the most valuable insurance brands in the world. With all 12 brands featuring in the 2019 ranking too, highlighting the relative stability of the insurance sector in the Chinese market.