Since the end of 2017, the China Insurance Regulatory Committee has taken numerous regulatory measures to address disorder in the insurance market, some of which have brought certain domestic life insurers to task. The measures are notable, as they underline a renewed emphasis on controlling financial risks, which is of utmost concern for the government.
Following the resumption of bilateral trade treaty talks between China and the United States, a 100-day plan was mooted which promised to improve trade ties going forward. One area of focus in this regard has been the foreign ownership limits that apply to inbound investment in Chinese financial services groups, including those pertaining to the country's insurance industry. This policy shift has given rise to expectations that further foreign investment in the insurance industry will increase significantly.
China's shift towards a knowledge-based digital economy is fuelling growth in the insurance sector, which aligns with the government's plan to double the rate of insurance penetration by 2020. By this date, insurance premium income is expected to have reached Rmb4.5 trillion. If this aim is achieved, China will have usurped the United States to become the world's largest insurance market, which bodes well for overseas insurers looking to participate in the domestic market.
A new wave of 'insurtech' companies (ie, insurers engaging with online distribution models and tech companies foraying into insurance) are recognising the gains to be made by entering into this emerging market. However, these developments by no means spell the end of the larger, more traditional Chinese insurers, which are adapting their longer-term business development strategies in response.
Recent ransomware attacks across the globe have once again brought to the fore the all-encompassing enterprise risk management challenge that cyber-risks present to corporations. The raft of operational consequences of such an attack present an ever-burgeoning opportunity for insurers to expand further into this potentially lucrative new line of business. This is particularly pertinent in China, where there has been a shift towards increasing digitisation and automation in various high-tech industries.