A long-term game of growth
The Chinese reinsurance market is tipped for long-term growth but there will be little change in the short term despite the number of startups in the market this year, says Eunice Tan, director at S&P Global Ratings.
Growth in the reinsurance market in China may be stunted in the short term due to regulatory changes and the slowdown of the Chinese economy. But the sector’s long-term prospects remain bright yet increasingly more competitive as more reinsurers secure licences to operate in the domestic Chinese market.
That is the view of Eunice Tan, Hong Kong-based director of financial services ratings at S&P Global Ratings. She says that the implementation of the new regulatory regime C-ROSS means that the level of capital domestic insurers need to hold against motor business, which accounts for some 80 percent of gross written premiums, has been reduced—meaning they also need to purchase less reinsurance.
“Under C-ROSS, the risk charge for motor insurance is the lowest among the various business lines,” Tan says.
She adds this will be offset to a certain extent by demand for non-motor reinsurance (such as property, agriculture, etc) reflecting the need to risk-manage this portfolio given its higher sensitivities towards large losses and both natural and manmade catastrophe events.
