A sharp rise in insurance premium growth in China, as reported by Chinese insurance regulator the CIRC, could result in an increased demand for reinsurance protection in the region.
Insurers in China during 2016 made 3.1 trillion yuan ($448.6 billion) in premium income, up nearly 30% on the previous year, with the pace of growth being significantly faster than in 2015 when it grew by 20% year-on-year, reported Reuters, citing the China Insurance Regulatory Commission (CIRC).
This record-level of insurance premium growth will require a new influx of insurance capital to back it up and should further stimulate the demand for reinsurance protection in the country.
But China’s insurance regulator also announced plans for further regulations in the industry, in an environment already marked by growing protectionism and tighter regulations.
Speaking at a news conference in Beijing, CIRC spokesman Zhang Zhongning said it plans to focus on risk prevention in company governance, insurance products, and also fund investment.
The insurance regulator has released a myriad of new rules to manage risks within the insurance industry and recently published CIRC drafts which propose to cap individual ownership limits in insurance companies at 33%, down from a previous limit of 51%.
This would stop conglomerates such as China Evergrande Group and Baoneng Group from using their insurance units to help fund acquisitions and riskier investments, explained Reuters.
These increased regulations, coupled with the launch of numerous locally owned reinsurers, make for an increasingly complex and competitive Chinese marketplace.
While the booming Chinese insurance and reinsurance industry represents an attractive opportunity for industry players, the global market might struggle to gain a piece of the pie as regulatory protectionism could prevent growth going to reinsurers outside the country.
