Swiss Re and PICC licence China agriculture model
Swiss Re and the People’s Insurance Company of China (PICC) are the latest insurer and reinsurer to licence the Asia Risk Centre’s (ARC) China agriculture model, which according to ARC signals the growing need of robust models to systematically quantify agriculture risk in the region.
Released in 2013, the Agriculture model is the only one which includes all major lines of business underwritten in China in a holistic approach where re/insurers and reinsurance brokers benefit in a complementary way.
“With the addition of Swiss Re and PICC to the list of users of our China agriculture model, ARC now covers 59 percent of the Chinese agriculture insurance premium and 25 percent of the premium underwritten by reinsurers,” said Dr Roman Hohl, ARC’s chief executive officer.
Swiss Re is the leading international reinsurer for agriculture in China and considers the model to be “an important part” of the company’s risk assessment evaluation.
Reto Schneider, head of agriculture for Africa, Americas and Asia at Swiss Re said: “The ability to understand and model various sensitivities to a wide range of parameters in the ARC model allows us to identify potential loss drivers in a dynamic market, where risk types and original policy conditions have been changing rapidly and reinsurance structures have become more complex.”
With a premium income of $2.7 billion in 2013, PICC is the largest insurer for agriculture in China with a 55 percent market share and manages the largest agriculture insurance portfolio at a global scale.
“The risk in agriculture insurance portfolios is highly complex and diverse. The ARC China agriculture model caters to our need to holistically model losses for crop, livestock and forestry exposure with the ability to include complex original policy conditions,” said Zhang Qing, chief risk officer at PICC.
The total agriculture insurance premium in China reached $5 billion in 2013. With increasing insurance penetration, higher sum insured per policy holder and the possible expansion into aquaculture, where China is the leading producer globally, it is projected to reach $8 billion in 2017.