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Swiss Re bullish about insurance market's prospects in nation

By ZHOU LANXU and OUYANG SHIJIA | China Daily | Updated: 2024-04-26 09:58
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A view of the booth of Swiss Re during an expo in Shanghai. [Photo/China Daily]

China's insurance sector is expected to double in size in the coming decade amid robust economic growth, making the country a more significant market for Swiss Re, the top executive of the global reinsurance company said.

Despite concerns raised over an economic slowdown, China is still among the world's fastest-growing economies and is expected to sustain a growth rate of around 5 percent, said Christian Mumenthaler, chief executive officer of Swiss Re Group.

China's insurance market is growing faster than its economic growth rate, Mumenthaler said. "We think that premiums (in China's insurance market) will double in 10 years, so we want to be part of that."

With its insurance market expected to outgrow several other regions, China, which is already of great strategic significance for Swiss Re, is expected to become an even more important market for the company, Mumenthaler said.

"I'm certainly excited about the opportunities (in China)," Mumenthaler said.

Insurance penetration in China remains relatively low and the protection gap — the difference between economic losses and insured losses — in natural catastrophes remains high, which presents enormous opportunities for growth in various sectors, such as catastrophe, corporate and agricultural insurance.

According to Swiss Re's annual report, the company earned net premiums and fee income totaling $1.537 billion in China in 2023. This represents about 3 percent of its total net premiums, making China the fifth-largest market and the largest emerging economy market for the reinsurer, following the United States, the United Kingdom, Australia and Canada.

Mumenthaler said that Swiss Re, which established a wholly owned branch in Beijing in 2003, has "very close, very strong relationships" in the country as one of the biggest reinsurers here, having profited from the opening-up of China's reinsurance sector since very early on.

In essence, reinsurance is a type of insurance business whereby a reinsurer offers coverage to other insurance companies, allowing them to transfer a portion of their insured risks to it. China opened up its reinsurance market to foreign companies in early 2000s after it joined the World Trade Organization.

Looking ahead, Mumenthaler said mortality products — which refer to financial products providing coverage or benefits based on the risk of mortality — will be one of the main areas of focus for Swiss Re's business expansion in China as the country's population ages.

In terms of property and casualty products, he said Swiss Re sees the biggest opportunity arising from the interlinked areas of natural catastrophe, agriculture and green transition.

Swiss Re is only one of the global giants in the reinsurance and insurance sectors that are looking to expand their footprint in China. Mumenthaler said there is "strong interest" from global insurance companies in China.

Joachim Wenning, chair of the board of management of Munich Re, another global leader in reinsurance, told China Daily earlier that the reinsurer may scale up the Chinese portion of its global business pie chart over time as its footprint here hopefully outgrows other markets.

Mumenthaler added that China's progress in green transition not only presents Swiss Re with new business opportunities as more assets will be created and need to be insured and reinsured, but also helps the world deal with the serious threat of climate change in a better way.

"On the decarbonization front, I think China has a real potential competitive advantage because China last year has (probably) installed more green energy than the rest of the world."

This trend is likely to continue, he said, as China has the necessary technology and decisiveness to accelerate its green transition.

This positions the nation to potentially lead in the production of vital green products like green steel and green aluminum, which are in growing demand worldwide.

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