The digital transformation currently taking place across China is expanding the boundaries of re/insurance and facilitating the development of solutions for previously uninsurable risks, according to a new report from Swiss Re.
Swiss Re describes digitisation as the main engine of China’s economy and expects to see exponential sector growth over the next decade.
In 2018, the gross value of the digital economy increased by 21% from the previous year to CNY 31.3 trillion, accounting for 35% of China’s gross domestic product (GDP), compared with 59% in the US.
Swiss Re expects to see risks such as cyber, intangible asset earnings and cash flow losses become a main source of growth for the insurance sector in the country.
As real-time data becomes more available and as analytics capabilities advance, Swiss Re says insurers will be better able to develop more personalised solutions for previously uninsurable risks such as earnings losses and cash flow volatility.
Data and advanced analytics could aslo facilitate more accurate underwriting and risk pricing.
However, Swiss Re warns that digital transformation also poses challenges for insurers, including the encroachment of BigTech companies such as Alibaba; insurers will also need to adhere with stringent data privacy laws.