As China adopts a ‘survivor’s mind-set’ it is both optimistic and realistic in looking for opportunities to invest and for its insurance market to continue to adapt and diversify amid the uncertainty in 2020.

China’s contribution to the global economy has risen significantly over the last three decades, and it has played an important role in coping with global economic and financial crises.

We have also witnessed the rapid growth of China’s insurance market over the last 20 years  ̶  still on course to be the world’s biggest overall by the mid-2030s (Swiss Re sigma No. 4/2020)  ̶  as well as its ability to adapt strategy and policy amid changing circumstances and government directives throughout that time.

Chinese insurance companies have been writing overseas business for marine and international cargo for many years, which very much strengthened their ability to respond to the 2013 launch of President Xi Jinping’s land-based ‘Silk Road Economic Belt’ and the seafaring ‘21st Century Maritime Silk Road’. The Belt and Road Initiative (BRI) and the Digital Silk Road (DSR) programmes continue to be a strategic direction for the Chinese government, with BRI project-related insurance premiums mostly reinsured back to China.

In the early 2000’s the Chinese government made it easier for its insurers to invest in overseas assets and that in turn has encouraged them to embrace new foreign underwriting opportunities as China accelerates the opening-up of its financial sector. This developing internationalisation of the market, along with growing capacity, experience and digital expertise is perhaps the defining trend of the Chinese insurance industry.

With the far-reaching impact of Covid putting the brakes on business opportunities during 2020, Chinese insurers, like many companies, have been more cautious and prudent whilst riding out the pandemic storm. However, there are now signs that their position and strategy for involvement in non-CIA (Chinese interests abroad) is changing with a number of the larger insurers adjusting their outlook and taking a more positive stance.

Insurers are honing their approach to address the uncertainties ahead by attempting to differentiate themselves from foreign competitors and to emphasise what they consider to be their competitive advantages. A recent cocktail event by China Life to promote their overseas business reinforces the signs of an increase in activity in the broader international market – despite the fact that there is clearly some way to go before we get back to the levels of activity which we saw in 2019.

The ability of the Chinese insurers to continue to grow by virtue of their diversification overseas continues to yield opportunities, not only for the larger insurers such as PICC and CPIC, but also small and medium sized companies who are becoming more active in the field and taking an increasingly important role in writing overseas business.

Rare Earth acts as a bridge facilitating both inward and outward business flows in China. The market’s involvement in international business is a learning process for all concerned and one which demands constant engagement, goodwill, and patience. But there is little doubt that this is a process which will continue over the coming years, as the market expands and grows in confidence.

We see a positive China rising to the challenges of 2020 and a more professional marketplace emerging. Chinese investments overseas and the increase in insurance market capacity, willingness, and ability to write overseas business is an increasingly important element of the economic giant’s overall development.