Having suffered five of the top ten deadliest natural disasters in history, with recent events affecting over 70 percent of its land area and more than half its population, China presents ongoing challenges to the insurance market. According to a new market report released by
"The China Property & Casualty Insurance and Reinsurance Market Report" also explores reasons for the slow development of catastrophe insurance and reinsurance despite China’s increasing natural hazards exposures.
Aon notes that the China Insurance Regulatory Commission (CIRC), in planning for the next five years, acknowledges that the insurance industry will continue to face major challenges, albeit not new ones, yet significant enough to warrant further study and consideration.
The key developments in the Chinese insurance and reinsurance market that are highlighted in the report include:
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History shows that China has suffered five of the top ten deadliest natural disasters ever recorded, with recent events affecting over 70 percent of China’s land area and more than half the population. As such, the CIRC’s 12th five-year plan includes the creation of a national natural disaster risk transfer program as well as the improvement of loss models and underlying data, says Aon. This could lead to potential growth in the purchasing of catastrophe insurance and reinsurance, notes the report.
“Over the past ten years, China has emerged as an insurance and reinsurance market that cannot be overlooked,” said Malcolm Steingold, CEO, Asia Pacific for Aon Benfield. “However, when we look beyond the macroeconomic growth, underlying opportunities and challenges are not necessarily what they first appear to be. For example, a detailed analysis of the property market shows that growth has been more in line with Gross Domestic Product than with the faster overall market growth, which is largely driven by motor business.”
Henry To, CEO, China for Aon Benfield, commented: “Over the years from 2001 to 2010, the Chinese insurance market (P&C and Life) was the second fastest growing national market in the world behind Malta 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.”