China’s forthcoming five-year economic plans are likely to generate re/insurance sector growth in protection-type products, mutual, health and pensions insurance, as well as infrastructure and other business opportunities, according to anew report from Swiss Re Institute.
The plan for the years 2021-2025 aims to transition China toward a high-income economy, with a focus on four priority areas of digitalisation, further opening of the economy and financial markets, green development, and support for less-developed regions.
The underlying goal will be to avoid growth stagnation at the middle-income level, with strategy ranging from environmental protection, regional and rural–urban disparities, and the aging population
Swiss Re noted that all of these areas are also potential opportunities for insurance growth.
To date, the Chinese government has given strong policy support to insurance to be used as a means to improve national social welfare, and Swiss Re expects this to continue.
Analysts believe that the new five-year plan will support insurance growth across a variety of sectors, and forecast average annual total premium growth of 8.3%, which is much higher than the predicted 1.8% growth in the developed market during the same period.
This compares with Swiss Re’s prediction of 5.4% average annual gross domestic product growth in China between 2021 and 2025, which is slightly below the wider consensus of 5.7%.
In terms of protection-type insurance products, Swiss Re sees a broader scope for liability insurance in relation to health, production and food safety, as well as credit and guarantee insurance for SMEs, and for personal lines in the areas of homeowner content, travel and sports insurance.
It also anticipates growth in green insurance, including environmental liability and natural catastrophe solutions, agri-insurance products for disaster events and revenue volatility, pension insurance, and insurance for new technologies and materials.
The five-year plan may also entail setting up more re/insurance players, including institutions for mutual, health and pensions insurance business, a China Agricultural Reinsurance Company, and insurance intermediaries.
In addition, China could support insurance sector investment in a variety of areas, Swiss Re said, such as industrial funds for strategic industries and advanced manufacturing, venture capital and equity funds, and a national China Insurance Investment Fund.
The company also expects to see a further opening up of Chinese market to foreign re/insurers, with the plan likely to lower the barriers to entry, increase the number of insurance branches in central, west and northeast China, and encourage Chinese insurers to invest overseas.
Finally, the insurtech sector in China could be boosted by some elements of the economy plan, possibly through improved infrastructure, lower costs due to new tech, more developed mobile terminal business, and improved cyber security and emergency response mechanisms.