European dominance of key insurance for shippers a hurdle for Beijing’s ambitions.

Wide-ranging sanctions on Russian oil exports in response to the Ukraine war highlight potential problem.

Among other comments, Wang Wei, Rare Earth Insurance Partner’s Chief Executive, shares his views with the South China Morning Post.

Bolstered by its status as the world’s factory, China’s shipping industry has developed rapidly in recent decades and the country is now home to seven of the world’s 10 biggest seaports. It also dominates the world’s shipbuilding industry, alongside East Asian neighbours Japan and South Korea.

Efforts have also been made to accelerate its development of shipping-related legal and financial services, but Wang Wei, said such professional services still lagged far behind its physical infrastructure.

“If we say the number of Chinese vessels increased from one to 100 in the past four decades, has its underwriting capacity also increased from one to 100 during the same time? It’s doubtful,” Wang said.

He said Chinese insurance companies had widened the scope of their marine insurance products in hull and cargo coverage. In terms of premium volume, China was the largest cargo insurance market in the world in 2021 and the second-largest hull insurance market, according to the International Union of Marine Insurance.

But Wang said the country still played a negligible role in some specific types of marine insurance, such as protection and indemnity, and reinsurance.

“These sectors have long been dominated by Europe and the United States, and it would be quite hard for China to break that barrier,” he said.

… While there was no imminent threat to China’s access to the global marine insurance market, Western dominance could still be a concern, the Hong Kong Federation of Insurers said.

In a written reply to the Post, it said reinsurance was still “dominated by international reinsurers, which can bring up different sanctions issues” in situations like the Russia-Ukraine conflict.

Since Beijing outlined its bay area development plan in 2019, promoting the area’s marine insurance industry has been a key priority. Incorporating Guangdong province’s manufacturing powerhouse, Hong Kong’s international financial centre, and top container ports in Guangzhou, Shenzhen and Hong Kong, analysts said it was the ideal location to incubate the sector in China.

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