China Re has said that it expects the coronavirus (COVID-19) pandemic to accelerate the development of the re/insurance industry by further motivating demand for health insurance and raising the importance of online technology and digital transformation.
For the life and health reinsurance market, ceding demand for domestic health insurance will remain robust, China Re said, while the integration of products and services will continue to be popular.
The reinsurer anticipates that insurtech and service innovation will become the new focus of competition in the market.
It added that demand for savings-type reinsurance and financial reinsurance business is likely to remain stable under the environment of low interest rates, while the number of market participants will also continue to rise.
On the primary side, China Re believes the life insurance industry will be able to maintain a favourable trend in the long term, as it refocuses on protection function and strengthening supply-side reform of products and services.
As a result, there are growing trends in product innovation and upgrade, service integration, interaction of online and offline channels, and increasing investment in insurtech.
In terms of the development of the capital markets and the deployment of insurance funds, the dynamics are likely to be heavily dependent on the state of the global economy, which is undergoing profound adjustments in 2020.
China’s economy is facing huge downward pressure in the short-term due to the COVID-19 pandemic, and the replacement of old macroeconomic growth drivers with the new ones will likely continue, with the supply-side structural reform of the financial sector further deepening.
During the transformation, China Re noted that the release of credit risks and the disturbance of risk appetite will remain the important factors affecting the performance of capital markets.
Low interest rates, combined with the complicated economic and financial situation will likely mean that the assets and liabilities matching of insurance funds will remain under pressure, bringing challenges to insurance asset allocation and investment.
