Aon Benfield has published a new report which explores the opportunities and challenges insurers may face when formulating strategies in China.
The report, titled the China Property & Casualty Insurance and Reinsurance Market Report, looks at the reasons for the slow development of catastrophe insurance and reinsurance despite China’s increasing natural hazards exposures.
The key developments in the Chinese insurance and reinsurance market, highlighted in the report, include:
– China represents close to 4 per cent of the world’s total insurance premiums at RMB1.45tn (USD226bn) for Life and Property and Casualty, which has grown from 1 per cent over the last decade. Industry experts in China are targeting a 15 per cent compound annual growth rate over the next five years
– The Chinese Property and Casualty market outpaced gross domestic profit expansion for the ten years to 2010, growing to RMB402bn (USD59.0bn), a compound annual growth rate of 20 percent
– Government subsidies have supported annual growth in Agriculture premiums of greater than 100 percent from 2005 to 2010 to reach RMB13.6bn (USD2.0bn)
– Aggregate reinsurance premiums ceded by Chinese Property and Casualty insurers in 2010 were RMB44bn (USD6.5bn), and have expanded by 67 per cent since 2005
In terms of perils, China has suffered five of the top ten deadliest natural disasters in history, with recent events affecting over 70 percent of China’s land area and more than half the population.
Regardless of this, Henry To, CEO of Aon Benfield for China, says they are standing by China as a lucrative market for insurance.
“Over the years from 2001 to 2010, the Chinese insurance market was the second fastest growing national market in the world and now represents close to 4 percent of the world’s total insurance premiums – up from about 1 percent in 2001
“Given the still low insurance penetration rate and China’s comparative economic outlook, this share can only be expected to grow. Aon Benfield is committed to the Chinese market and strives to bring global expertise and capacity to facilitate the development of our clients and the general market.”
Aon Belfield’s confidence could stem from the China Insurance Regulatory Commissions latest five year plan, which includes the creation of a national natural disaster risk transfer program, as well as the improvement of loss models and underlying data which could lead to a spike in the purchasing of catastrophe insurance and reinsurance.
